The strong acute care growth experienced by Universal Health Services Inc. ( (UHS - Get Report) ) in the first quarter, "following on strong results across the board from medical device companies will likely fuel the bull thesis that the larger hospitals are setting up for a strong 1Q," wrote Wedbush Securities analyst Sarah James in a Thursday note.
Universal Health's peers that are set to report results in the coming days include LifePoint Health Inc. ( (LPNT - Get Report) ), Community Health Systems Inc. ( (CYH - Get Report) ), Tenet Healthcare Corp. ( (THC - Get Report) ) and HCA Holdings Inc. ( (HCA - Get Report) )
Universal Health Services on Wednesday unveiled better-than-expected results, fueled by a 7.8% increase in acute care same facility adjusted admissions.
The company reported adjusted earnings of $1.98 per share, up 11% year over year, beating analysts' estimates of $1.87 per share. Net revenue rose 10.1% to $2.45 billion compared to the year-period. Analysts had forecast $2.39 billion, according to Bloomberg.
In Universal Health's behavioral health care services business, adjusted admissions on a same-facility basis grew 1.4%.
On Thursday's earnings call, Chief Financial Officer Steve Filton said the company sees a "number of compelling M&A opportunities" in both behavioral health and acute care.
Discussing the acute care side, he said: "We believe, as I said before with some high degree of confidence, that we will deploy capital into the acute care business in 2016 at levels that we probably have not in a while."
Earlier this year, The Deal, a sister publication of TheStreet, reported that after doing a number of deals in behavioral health in recent years, Universal Health plans to emerge as a major buyer of acute-care hospitals and hospital systems in 2016 and beyond. "There are a number of actionable opportunities in our pipeline at various stages," said John Rizzo, UHS' vice president, strategy and business development, in an interview with The Deal in January.
The company in the past has focused its M&A efforts on the behavioral side, paying $350 million for Nashville, Tenn.-based addiction treatment center operator Foundations Recovery Network LLC in a September deal. The company entered the U.K. mental health market via its September 2014 purchase of Cygnet Health Care Ltd. for $355 million, and expanded there this past October with its $148.5 million acquisition of Alpha Hospitals from London private equity firm, C&C Alpha Group.