So far, so good for Humana (NYSE:HUM). But the question still remains whether the company's aggressive strategy will bring health and wealth to its investors or leave them feeling a bit sick.

Revenue was up 39% for the first quarter, as premium growth of nearly 77% in the government (mostly Medicare) business dramatically outperformed the negative 3.5% result in the commercial side of the business. Profitability, though, was a different story. The medical expense ratio held flat at 83.7 (improving in commercial, worsening in government) and reported operating income that was up over 15%.

Keep in mind, though, that the new Medicare Part D changes the way in which the companies in the managed health sector will recognize costs from quarter to quarter. This was true for UnitedHealth (NYSE:UNH) and it's arguably even truer here since the Medicare business is such a huge part of this company's future.

But that future Medicare business also scares me. Enrollment was exceptionally strong, up 51% in government but up less than 2% in commercial, and the company's Part D enrollment has thus far surpassed even the high end of their estimate. Why is that a problem? Well, it's fair to wonder whether it hasn't been overly aggressive with its marketing and bidding. If that turns out to be the case, the former could lead to lawsuits, while the latter could lead to poor underwriting earnings and poor overall financial performance.

But that's the trouble with underwriting decisions -- you can't really say anything now other than "it looks aggressive" or "it looks fine." This is one of those consummate examples of "you don't know until you know." Personally, I just find it hard to believe that Humana could profitably underbid so many others in this industry without taking on some real risks.

Accordingly, this looks like a binary stock to me. If you think its underwriting is sound, the stock is probably pretty cheap here. If you are concerned about the underwriting and what it might mean for future earnings, you might want to look instead at other managed care companies, like WellPoint (NYSE:WLP).

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UnitedHealth is a Motley Fool Stock Advisor recommendation.

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