Psychiatric Solutions 3Q Net Soars 88% As Margins Balloon

Psychiatric Solutions Inc.'s (PSYS) third-quarter profit surged 88% on sharply higher margins.

The behavioral health programs provider is set to be bought by hospital company Universal Health Services Inc. (UHS) for $2 billion cash and the assumption of $1.1 billion in debt. The deal comes as part of Psychiatric Solutions' business is managing psychiatric units for other hospitals and government agencies. It specializes in treating children with behavioral or mental illnesses.

Psychiatric Solutions posted a profit of $52.9 million, or 92 cents a share, up from $28.2 million, or 50 cents a share, a year earlier. The latest quarter included a 2-cent loss from discontinued operations. Revenue increased 12% to $508.5 million and it rose 10% on a same-facility basis.

Analysts polled by Thomson Reuters had estimated earnings of 59 cents on revenue of $487 million.

Operating margin surged to 17.1% from 10.1% as operating costs rose just 3.5%.

Total admissions rose 8.2% and revenue patient per day increased 6.1%.

Shares of Psychiatric Solutions closed at $33.61. The takeover price is $33.75.

-By Yogita Patel and Kevin Kingsbury, Dow Jones Newswires; 212-416-2262; [e-mail]