UnitedHealth Shines As Growth Accelerates on All Fronts, Flickr.

The health insurance industry has gone through some major changes in recent years, but that hasn't stopped UnitedHealth Group and many of its peers from seeing their shares climb substantially during that time. Healthcare reform has forced industry players to look beyond simply being insurance companies to take a more active role in healthcare generally, and UnitedHealth has driven much of its recent success from areas outside the core insurance realm. In its first-quarter financial report Thursday morning, UnitedHealth impressed shareholders with the extent to which it has fleshed out its healthcare offerings, and the company remains optimistic about its future prospects. Let's take a closer look at UnitedHealth and how it put together an impressive quarter.

The story behind UnitedHealth's success

At the highest level, UnitedHealth did a good job of producing the growth that investors wanted to see. Overall revenue climbed 13% to $35.76 billion, besting the consensus projection by more than $1.1 billion. Net income jumped 29% to $1.41 billion, and earnings of $1.46 per share were more than a dime higher than those following the stock had expected to see.

Looking more closely at the company's various businesses, almost all of UnitedHealth's segments contributed to growth. Within the UnitedHealthcare segment, government-based insurance plans produced the greatest gains, with its Community and State division soaring 33% and its Medicare and Retirement unit also seeing double-digit percentage growth. The Optum health-services division also grew sharply, with 15% growth coming mostly from the OptumHealth health-management unit and the OptumInsight advisory consulting business. Only the global division suffered drops in revenue, and the plunge in the Brazilian real was the biggest cause for the sales decline there, as constant-currency revenues jumped 12% from the year-earlier quarter.

UnitedHealth was clearly pleased with the results. "We are working to create more effective and more modern approaches to access and delivering healthcare," said CEO Stephen Hemsley. "We are gratified with the market response to our efforts."

Image: UnitedHealth.

Healthier times remain ahead for UnitedHealth

As strong as UnitedHealth has been lately, the company doesn't see anything slowing it down in the near future. The company boosted its guidance for 2015, with sales of $143 billion producing earnings of $6.15-$6.30 per share. The guidance increase amounts to roughly $2 billion in sales and between $0.05-$0.15 per share in earnings.

Looking further out, UnitedHealth expects even better growth. The proposed buyout of Catamaran will actually cost UnitedHealth about a dime per share in earnings this year, as the company deals with transaction costs and a reduced amount of stock repurchase activity in order to help finance the transaction. Beginning next year, however, UnitedHealth believes that Catamaran will add about $0.30 per share to its 2016 earnings, showing the importance of the pharmacy benefit management arena to healthcare companies generally.

Certainly, demand for UnitedHealth services has continued to explode higher. The company added 680,000 customers to its Employer and Individual plan rolls, and UnitedHealth served 200,000 more Medicare Advantage patients and 180,000 more Medigap supplemental policy customers during the quarter. The Community and State side was one of the most impressive, with a 750,000-member increase over the past year equating to 17% of its 5 million customer base.

UnitedHealth investors celebrated the news, with the stock rising more than 3% at midday following the morning announcement. With so many changes in the health-insurance field, it's a sign of UnitedHealth's strength that the company has been able to adapt and thrive in the new environment. Shareholders should expect further growing pains, but for now, UnitedHealth has set the stage for sustained growth for the foreseeable future, and that should benefit investors in the long run.

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The article UnitedHealth Shines As Growth Accelerates on All Fronts originally appeared on

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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