Earnings season has been a time when Valeant Pharmaceuticals' (NYSE:VRX) shareholders have played ostrich over the past year and a half -- and with good reason.

Last year, Valeant wound up lowering its profit outlook and earnings before interest, taxes, depreciation, and amortization (EBITDA) on three separate occasions, and some (including this Fool) question whether the company's 2017 guidance wasn't a bit hopeful. Tomorrow, May 9, will see Valeant report its first-quarter earnings results before the opening bell, and who knows what to expect at this point.

An investor pushing the quarterly report tab on a digital screen.

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Wall Street will be looking for Valeant to deliver in the neighborhood of $2.2 billion in sales, representing a mid-to-high single-digit percentage sales slide year-over-year. In terms of its bottom line, the consensus (which has been all over the place) calls for $0.87 in EPS, which would be notably lower than the $1.27 in adjusted EPS in Q1 2016 and well below the $2.36 in adjusted EPS recorded in Q1 2015. Though past performance is no guarantee of future results, Valeant has missed the Street's profit projections in four of the past five quarters.

Here's what Wall Street may be eyeing

Wall Street and investors will be looking for a number of improvements in Valeant's quarterly report.

To begin with, they'll want to see continued progress with paying off what amounted to $29.85 billion in debt as of the end of 2016. Valeant has pledged to pay down $5 billion in debt over an 18-month period, and it's certainly made some progress to that effect.  During the first quarter it sold three medicated skincare products to L'Oreal for $1.3 billion, and its Dendreon assets, which included late-stage prostate cancer immunotherapy Provenge, to China's Sanpower for $820 million.

According to a prior press release, Valeant used $1.1 billion in proceeds to pay down debt. It's also been actively funneling its operating cash flow into paying down its debt. While it's tough to gauge exactly where Valeant will land debt-wise at the end of Q1 2017, my guess would be in the $28 billion to $28.5 billion range.

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Investors are also going to want to see progress made with its core operations. During the fourth quarter, Valeant announced a 1% sales decline in its Bausch & Lomb segment, and a dismal 17% sales decline from its Branded Rx operations, which was mostly the result of a disappointing sales uptake of Salix's therapies. Yet, Valeant forecast low-to-mid single-digit growth for both segments in 2017, which seems like a tall order given its lack of pricing power. If you recall, pricing power actually hindered, not helped, Valeant in Q4. All eyes will likely be on its Bausch & Lomb and Branded Rx operations tomorrow morning.

Wall Street is also probably going to be eager to see improvement in its drug-distribution partnership with Walgreens Boots Alliance. The deal heavily favors Walgreens, and in the early part of 2016 it was cited as a hindrance to Valeant's quarterly results. Wall Street and investors will likely be looking for some language on if that partnership has been more beneficial to both companies, and not just Walgreens.

But, this is the only number that matters

However, when Valeant does report its quarterly results on Tuesday morning, its sales figures and EPS probably won't mean squat, because there's a far more important number that this Fool and other pundits will be waiting to see. That number is Valeant's EBITDA, because it's the key to whether or not the company's senior secured lenders are happy or not.

Yes, Valeant is carrying around a lot of debt, and the company is trying every strategy under the sun to repay a good portion of this debt. But, the really critical debt-related figure that matters most is its EBITDA-to-interest coverage ratio. In other words, we want to know how much EBITDA Valeant is generating in relation to the money it's paying to service its existing debt. The higher this ratio, presumably the healthier a company is financially.

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Based on the company's Q4 release, it was projecting $3.55 billion to $3.7 billion in fiscal 2017 EBITDA and $1.85 billion in debt servicing costs. In an optimistic scenario, that's an EBITDA-to-interest coverage ratio of just 2-to-1. That's exceptionally low, and it's worrisome to lenders who have debt covenants in place to protect their loans. Even if Valeant repays its loans on time and pushes its maturities out farther, if it's not generating enough EBITDA to satisfy its secured lenders, the company could default on its debt, leading to a fire-sale of its assets.

This is why Valeant is in so much apparent trouble. It needs to sell assets to reduce its debt, but there's more to be concerned with than just debt reduction. The multiple debt restructurings Valeant has undertaken to ease its debt covenant restrictions and push out its maturities have resulted in fees and higher interest rates. It can't just sell its assets and pocket the cash. It needs a certain premium paid for its assets to make a sale worthwhile, because it needs this EBITDA-to-interest coverage ratio to rise. Yet, Valeant's peers fully understand its woes, and as such have little interest in paying a premium for its assets.

The key to whether Valeant's stock rises or falls tomorrow lies with its Q1 EBITDA, and whether it sticks with its original full-year EBITDA guidance. If Valeant lowers its EBITDA guidance once more, it could be another ugly day for Valeant's shareholders.

Set your alarms folks, because the big day is nearly here.

Sean Williams has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Valeant Pharmaceuticals. The Motley Fool has a disclosure policy.