Health insurance plays a vital role in promoting the growth of the healthcare industry, and UnitedHealth Group (NYSE:UNH) has been a leader in health insurance for years. Over the past year, UnitedHealth has made a key transition that has helped it avoid some of the headwinds that its peers have had to deal with, and smart strategic moves have put the health insurer in position to take maximum advantage of favorable trends in certain areas of the market.

Coming into Tuesday's third-quarter financial report, UnitedHealth investors had high hopes for the health insurer, and they weren't disappointed with the company's numbers. With strong momentum, UnitedHealth has high expectations that 2019 could be an even better year operationally than 2018 was, and that's making shareholders more excited than ever in the business.

Graphical representation of people and a hand with a healthcare symbol above it, in front of a UnitedHealth logo.

Image source: UnitedHealth Group.

Healthy results for UnitedHealth

UnitedHealth's third-quarter results were just the latest in a series of encouraging performance from the health insurer. Revenue of $56.6 billion was up 12% from year-ago levels, outpacing what those following the stock had expected to see on the top line by a narrow margin. Net income jumped 28% to $3.28 billion, and after allowing for some extraordinary items, adjusted earnings of $3.41 per share topped the consensus forecast among investors by $0.12 per share.

Fundamentally, UnitedHealth was able to fend off threats and build on strengths. The insurer's medical care ratio improved by nearly half a percentage point to 81%. Although operating costs rose slightly to 15% because of the return of the health insurance excise tax, falling income tax rates helped to offset the overall impact to the bottom line.

From a segment perspective, UnitedHealth enjoyed balanced growth. The UnitedHealthcare health insurance business saw revenue rise nearly 13% as the company saw growth in customer counts and better pricing practices. The best gains for the business came from the community & state and Medicare & retirement divisions, as well as from UnitedHealth's global business. Relatively slow growth in employer and individual policies had a detrimental impact on margin levels, but overall, the numbers were solid.

Meanwhile, UnitedHealth's Optum unit saw its top line rise 11%. The strongest growth came from the unit's OptumHealth health management business, and the OptumInsight unit also did well on strength in data analytics and services offerings. Even the OptumRx pharmacy benefit management unit managed to see revenue climb 9% from year-ago levels.

What's next for UnitedHealth?

CEO David Wichmann sees plenty of good things ahead. "[Our] results provide a sense of the capacities to advance growth within our business," Wichmann said, "capacities rooted in the breadth and adaptability of our business approach and, above all, in our mission: helping people live healthier lives and helping make the health system work better for everyone."

UnitedHealth's promising future also had immediate positive impacts on the health insurer's near-term guidance. The company now expects to post adjusted earnings for the full year of about $12.80 per share. That's up from its previous range of between $12.50 and $12.75 per share, and UnitedHealth believes that its core competencies in areas like data analytics for physician referrals, on-demand healthcare benefits, integrated medical and pharmacy information systems, and consumer digital health platforms should translate to further growth in the years to come.

UnitedHealth investors were quite happy with the report, and the stock climbed nearly 5% on Tuesday following the morning announcement. The healthcare sector still has plenty of opportunities for innovative leaders to find ways to make sure that patients benefit from all the medical and technological advances available to them, and thus far, UnitedHealth has done a lot to put itself in position to be the go-to provider for cutting-edge services to help improve healthcare experiences across its network.

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