Over the long run, stocks tend to rise or fall depending on how strong their fundamental businesses perform. For UnitedHealth Group (UNH 2.96%), the health insurance industry has led to immense growth, as the company has capitalized on opportunities and found ways to outpace most of its rivals. However, even with the benefit of all the positive things that UnitedHealth has produced in its business, investors have recently been nervous about the potential for yet another round of healthcare reform and its perceived impact on the health insurance industry.

Coming into Tuesday's first-quarter financial report, UnitedHealth investors had generally been nervous about the political climate and were looking for reassurance about the company's ability to keep growing. UnitedHealth showed just about every indication that long-term investors would want to see, and with traders seemingly remaining disappointed about the possibility of short-term political pressures, value investors have a new opportunity to look at a strong business with improving prospects for the foreseeable future.

UnitedHealthcare logo.

Image source: UnitedHealth Group.

UnitedHealth starts 2019 strong

UnitedHealth's first-quarter results kept up the pace of growth that investors have sought from the health insurance giant. Revenue of $60.3 billion was up 9% from year-ago levels and better than the roughly 8% growth rate that most of those following the stock were looking to see. Earnings grew an even healthier 19% to $4.8 billion, and that produced adjusted earnings of $3.73 per share, beating the consensus forecast among investors by $0.13 per share.

From a segment perspective, UnitedHealth saw relative strength across most of its business lines. The UnitedHealthcare division saw revenue pick up 8% to $48.9 billion, improving its operating earnings by 23% from year-ago levels. As we've see in recent quarters, the greatest strength came from the Medicare and retirement segment, which enjoyed double-digit-percentage top-line growth. However, more modest gains also came from UnitedHealth's employer and individual, community and state, and global units. Total customers served under the division climbed by 880,000 members.

UnitedHealth's Optum unit also saw solid gains, including a 12% rise in revenue to $26.4 billion and a 14% increase in operating earnings over the past year. The OptumHealth health management business saw the sharpest growth rate, but the OptumRx pharmacy benefit management business and the OptumInsight data analytics unit also showed signs of good performance. OptumHealth now serves 93 million members, and OptumRx filled 339 million prescriptions in the quarter.

Fundamentally, UnitedHealth stayed efficient. Consolidated medical care ratios rose slightly to 82%, but the insurer still said that it was seeing favorable reserve development during the quarter, and operating costs were significantly lower than in the year-ago period.

Can UnitedHealth keep growing in 2019?

As usual, CEO David Wichmann confined his comments in the press release to praising his employees for helping to improve "the health of the people we serve and the performance of health systems for everyone" as a value-enhancing proposition for society.

UnitedHealth also gave investors good news on its outlook. The company now believes that adjusted net earnings for the full 2019 year will come in between $14.50 and $14.75 per share, which is up $0.05 to $0.10 per share from its previous forecast.

Yet many people seemed to focus on the company's conference call, during which Wichmann made less favorable comments about the possibility of headwinds from regulatory reform. In particular, the CEO called out various "Medicare for All" initiatives as being potentially disruptive to the healthcare system, saying that existing public and private programs can best meet the goal of universal coverage.

Because of that nervousness, UnitedHealth investors seemed to ignore the positive guidance and instead worried about a worst-case scenario for the future, and the stock fell 4% Tuesday after the report. Yet at least for now, UnitedHealth seems to be doing everything right from a business standpoint, and that should make long-term investors happy about the company's prospects years down the road.