Markets are hardly rational in the short run, but strong growth and a service-oriented business model can help shield some investments from market downdrafts. For instance, since I last wrote on medical health provider Psychiatric Solutions (NASDAQ:PSYS), the stock has climbed about 12% -- outperforming the Standard & Poor's 500 by 15%.

First-quarter results indicate continued growth for this company. Revenue was up 34% on the back of a 6.4% increase in same-facility revenue. Looking deeper, there were flat admissions and a 1% increase in revenue per patient, but a 5.4% increase in patient days. While this level of growth is somewhat slower than the prior quarter's, Psychiatric Solutions was hurt by the earlier Easter and resulting spring break (many of the company's patients are children and adolescents).

Along with higher revenue, the company experienced modest improvement in both the operating and EBITDA margins. While net-income comparisons are altered by losses incurred on debt refinancings, adjusting those out indicates that net income grew by nearly 93% on a year-over-year basis.

The bigger news from the quarter, though, is the company's acquisition of 20 facilities from Ardent Health Services. Ardent had been the third-largest player in this highly fragmented market, and the addition of its 2,000 beds will make Psychiatric Solutions the industry's largest care provider.

It's not coming cheaply, though. Psychiatric Solutions will pay $560 million for the facilities -- $500 million in cash and $60 million in stock. Given that Ardent reportedly took in about $300 million in revenue last year, that's a valuation of nearly 1.9 times sales -- even higher than Psychiatric Solutions' present price/sales valuation of 1.6. Although the acquisition should be accretive to earnings, this is unquestionably a major move for the company.

It seems to me that Psychiatric Solutions' outlook remains positive. Reimbursement rates are improving, and advocacy from mental health groups is helping to promote both greater awareness and greater willingness to adequately treat (and reimburse) patients. With the market still heavily fragmented, Psychiatric Solutions should be able to look to both organic performance and ongoing consolidation to fuel continued growth.

I'm not going to try to make the case that Psychiatric Solutions shares are cheap. But I will say that the company is producing very solid growth. Accordingly, investors who choose to look at valuation relative to growth (as opposed to viewing valuation as an "absolute"), and who can accept the risks and volatility that seem to inevitably accompany fast growers, might want to explore this idea further.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).