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A marketwide sell-off has led shares of UnitedHealth Group (NYSE:UNH) to tumble 10% from their summer highs -- a drop that could be offering investors a compelling chance to buy the nation's biggest health insurer.

Growing the business
UnitedHealth Group is a healthcare Goliath that insures tens of millions of people, runs a data analytics business, and operates a pharmacy benefit manager.

The company makes most of its money from its insurance plans, which raked in $33.1 billion (yes, billion) in premium revenue in the second quarter, up 10% year over year.

Demand for UnitedHealth's insurance plans has been soaring following the implementation of Obamacare in 2013, and as a result, membership in UnitedHealth plans climbed by 1.6 million people in the past year.

Obviously, a lot of membership growth is the result of UnitedHealth's offering health-insurance plans on the Obamacare exchanges in 24 states, but another reason membership is climbing is that 31 states have chosen to adopt Obamacare's expansion of Medicaid eligibility.

This year, UnitedHealth's Medicaid plan membership has increased by 155,000 people, and as a result, revenue from UnitedHealth's Community & State operations grew 25% year over year to $7.2 billion in Q2.

While Obamacare has been a big driver of UnitedHealth's membership increase, older and longer-living baby boomers are fueling the company's revenue growth, too.

UnitedHealth Medicare Advantage and Medicare Supplement plans cover 7.2 million seniors, and with 10,000 baby boomers turning 65 daily, that number should continue growing for the foreseeable future.

Tackling technology
In addition to being a mammoth in health insurance, UnitedHealth's Optum business is succeeding by leveraging patient data to improve patient outcomes and reduce patient healthcare costs, and that's proving to be big business.

In the second quarter, Optum's sales grew 16% year over year to $13.6 billion, as more providers embraced Optum Health's OptumCare health-delivery solution, which helps administer practices, and Optum Insight's Optum360, a technology software suite that helps providers manage healthcare coding and billing. Sales within Optum's OptumRx pharmacy benefit manager, which helps payers negotiate drug prices and patients take their medicine correctly, also improved, increasing 11% from a year ago.

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Source: UnitedHealth Group

Leveraging scale
Insurance is unequivocally an industry of scale, and as premium revenue jumps because of membership growth, more sales are finding their way to the bottom line.

So far, fear that Obamacare would imperil UnitedHealth's profitability because of the enrolling of sick patients, rising healthcare utilization, and fees and taxes, have been unrealized.

Thanks to pricing schemes that are offsetting headwinds, UnitedHealth Group's net margin was 4.4% exiting June, up slightly from the year before -- a year in which UnitedHealth pitched Obamacare plans in only a handful of states.

Because pricing and patient health have tracked within the company's expectations, the consolidated company's EPS grew 15% to $1.64 last quarter, and that puts it nicely on track to deliver on its guidance for full-year EPS of at least $6.25. If so, then it could also be in fine shape to deliver on industry watchers' EPS forecast of $7.36 next year.

Looking forward
If you're wondering whether UnitedHealth's sales and profit winning streak can continue, you might want to consider that 10% of Americans remain without health insurance, according to the CDC.

While that's a 4% improvement from 2007, it also means that there are tens of millions of people that could still end up becoming customers of UnitedHealth and its peers in the future; especially since penalties associated with not having health insurance are set to at least double this year before jumping again in 2016.

Couple Obamacare tailwinds with potential growth tied to the graying of America and the rising embrace of analytics throughout healthcare, and you have a winning combination that could suggest owning UnitedHealth as a core component in long-haul portfolios. If so, then this could be the right time to pick up shares. 

 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies 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.