UHS, Acadia push past UK snags to solid Q1 earnings
Behavioral health giants Universal Health Services and Acadia Healthcare each posted earnings and revenue gains in the first quarter, though UHS received potentially bad news from anti-trust regulators on its December acquisition of a British behavioral health chain.
UHS, based in King of Prussia, Pa., posted net income of $206.1 million during the first quarter compared with $190.8 million in the year-ago period.
Revenue in the quarter increased 6.7% to $2.61 billion from $2.45 billion during the first quarter of 2016.
UHS owns 26 acute-care hospitals and 292 behavioral health hospitals.
But the picture isn't entirely rosy for the company. UHS received word from Britain's Competition and Markets Authority last week that the agency still has antitrust concerns about UHS's December acquistion of the Cambian Group, UHS disclosed Tuesday.
That $464 million deal seeks to add Cambian's 81 adult service facilities in Britain to the 21 UHS already operates.
The CMA, Britain's version of the U.S. Justice Department's antitrust division, informed UHS that it would send the Cambian review to a phase 2 investigation unless UHS makes "acceptable undertakings" to address the concerns. Typically, that means divesting facilities in markets where competition would be constrained by the merger.
The company said the CMA has given UHS until April 28 to propose corrective actions, with a decision on a referral to further investigation scheduled for May 8.
Franklin, Tenn.-based Acadia went through a similar drill last year. It had to sell 21 behavioral health locations in Britain plus a facility set to open to gain approval from the CMA for its $2.2 billion acquisition of 300-hospital Priory Group.
The race to Great Britain was prompted by the Health and Social Care Act of 2012 that opened more patient care to the private sector.
Like UHS, Acadia had a solid first quarter back home. The company's net income increased 36% to $35.0 million for the first quarter of 2017 compared with $25.7 million for the first quarter of 2016.
Revenue jumped 10% to $679.2 million in the quarter from $616.8 million for the first quarter of 2016.
Acadia CEO Joey Jacobs said results would have been better if not for an unfavorable currency fluctation in the United Kingdom, where the Priory acquisitions added 6,200 behavioral health beds.
"The favorable impact of the growth in our beds in operation during the first quarter was partially offset by a reduction of approximately six percentage points in our revenue growth rate due to the post-Brexit decline in the exchange rate of the British Pound Sterling to the U.S. dollar, in addition to the impact of the first quarter of 2017 having one less day due to leap year in 2016," Jacobs said.
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