Former pitbull of the health insurance world, UnitedHealth (NYSE:UNH) may finally be getting its bite back, based on its Q2 earnings call.

While company execs didn't admit that their sit-on-the-sidelines posture on the Obamacare exchanges proved to be a dud, they at least tossed the strategy in the trash. Company execs said that in 2015, they'll be moving "into as many as 24 states." A not-too-shabby increase, to the tune of sixfold, since the company is only in four exchanges according to the Wall Street Journal.  

On that news, and better-than-expected numbers, the insurance giant's stock ticked up 1.6% for the day. That's in contrast to last quarter's earnings release, which was so depressing UnitedHealth's stock tanked for a month. As a bellwether company, UnitedHealth's last quarter's earnings also temporarily soured the rest of the sector, including rivals Aetna (NYSE:AET) and Wellpoint (NYSE:ANTM).

UnitedHealth's total revenues jumped a better-than-expected 7.1% to $32.6 billion.  Net income came in at $1.41. That's less than last year's $1.44 billion, but per-share earnings were two cents higher than a year earlier, when more shares were outstanding.

The company also improved its overall financial outlook, boosting the low end of its per-share earnings by 10 cents to $5.50-$5.60. The revenue forecast for the year increased to $130 billion. The previous range was $128 billion to $129 billion.

United Health's income tax rate for Q2 climbed from around 35% to more than 41%. An expected increase, as all health insurers will start paying an industrywide tax that is non-deductible this year. UnitedHealth's largest operating expense, medical costs, also climbed 6% to $23 billion.

Second quarter profit slid 2%. The continuing slide in profit is also not a surprise. UnitedHealth said back in December that it expected the new health care law to reduce its after-tax operating earnings by $1.1 billion this year. Consolidated operating margin came in at 7.8%, down 10 basis points from the year-ago quarter.

Gains in Medicare and Medicaid, but market share erosion elsewhere
Total Medicaid growth in the quarter jumped 29% versus last year to $5.8 billion. The gain was unexpected and may bode unexpectedly good quarterly revenue ahead for insurers who are heavy hitters in Medicaid, including Molina Healthcare and Centene.

Medicare and retirement revenue also grew 7% to $732 million.

The number of people served in the senior sectors and internationally grew, helping lead UnitedHealth Group to serve 270,000 more people during the quarter. 

Private health insurance  is still UnitedHealth's biggest business. In the conference call, company execs said that after "closely examining" the first year of the Affordable Care Act and "pricing of rivals," they will be expanding aggressively into the government-run market.

Sounds great, but will it be too late?

Bit competitors (including Aetna and WellPoint) currently all participate in considerably more Obamacare exchanges than UnitedHealth. In addition, many small regional insurers rushed in last year to scoop up share.

There's more exchange competition to deal with than before, and UnitedHealth has seen pressure in its employer market as well. It has had trouble in the New York small business market, according to the Wall Street Journal. In response to the growing competition, UnitedHealth execs have said they believed their competitors were pricing insurance at low rates that wouldn't be sustainable,

In other words, UnitedHealth plans to wait the small guys out--expecting them to drop out or raise prices eventually. But does the company really have that luxury anymore? While UnitedHealth is the market leader in health insurance, there are a lot of other insurers out there competing for market share. And as any sidelined athlete will tell you: being the biggest only conveys an advantage when you're actually competing.

An estimated 13 million people are expected to enroll in Obamacare's next open enrollment period. With its plan for a six-fold increase in exchange participation, UnitedHealth clearly assumes it will be able to snag back its former clients, as well as add a significant number of new ones.

Hopefully, it will happen. But coming from behind is a poor position to be in, even for this powerhouse company. UnitedHealth has a lot of strength, but I believe it will be hard for the company to show as much share-price upside as some of its competitors. As the saying goes, "Scared money doesn't win."

UnitedHealth's sweet spot -- Optum
Meanwhile, thank goodness for Optum.The company's subsidiary turned in its usual superb performance. Optum showed a 23%  increase in year-over-year earnings. The subsidiary is worth its own discussion, suffice it to say here that the division earned nearly a quarter of the corporation's revenues in 2013 and may be the company's best bet for a great future.

Overall, the Street liked what it saw in this quarter's earnings release. In fact, the stock's uptick could have been significantly higher. Shares rose almost 4% in morning trading, before outside news rattled Wall Street.

UnitedHealth's stock was up 13% for 2014 through Thursday's close.