As we have long said here at The Motley Fool, you don't need tech stocks to find fast-growing companies. In-patient mental health service provider Psychiatric Solutions (NASDAQ:PSYS) posted 40% revenue growth for the fourth quarter of 2004, with net income rising 178% to more than $6 million.

Revenues were boosted both by the acquisition of facilities (total beds available grew about 50% for the year) and a nearly 10% increase in same-facility revenue. The company experienced a 1.2% decline in revenue per patient day, but that was overshadowed by an 11.2% increase in patient days, a 6% increase in admissions, and a 4.7% increase in duration of stays.

Cash flow also grew strongly for the year. Full-year free cash flow was nearly $23 million and more than double the year-ago figure. While this is strong growth by any measure, it must be considered in context: The company is spending considerable sums on the acquisition of new facilities.

Psychiatric Solutions is a consolidator in the $10 billion in-patient mental health market, as 10 acquisitions in 2004 and more on the way in 2005 would suggest. Nevertheless, the company estimates it has only about 5% of total patient market share, even though it is essentially running neck and neck with Universal Health Services (NYSE:UHS) to be the largest provider of in-patient beds.

Fools should also realize that these acquisitions don't come without costs. The company carries nearly $175 million in debt and the debt-to-capitalization ratio is about 42%. For the full year of 2004, shares outstanding increased by nearly 50%, and goodwill is more than 25% of total assets.

As a result, Psychiatric Solutions clearly needs to maintain profit and cash-flow growth to maintain this sort of capital structure. Fortunately, growth does not appear to be a problem at this point. Not only does the company have ample opportunity for ongoing accretive acquisitions, but the fundamentals of the market are strong.

While government payors like Medicare and Medicaid supply more than half of the company's revenue, there has not been a strong push from the government to curtail spending or reimbursement for mental health. Given that roughly half of all potential patients don't receive needed treatment and that there was a 42% cut in the number of available beds during the 1990s, there is clearly a compelling ongoing demand for in-patient psychiatric and mental health care.

These shares are hardly depressed in terms of valuation. The trailing PE and EV-to-FCF ratio are both about 39. Those figures compare to a return on equity below 10% and a projected growth rate of 20%. Thus, while Psychiatric Solutions is a rapidly growing company with a very bright future, the stock is not quite so compelling at today's prices.

Fool contributor Stephen Simpson, has no ownership interest in any stocks mentioned.