UnitedHealth's

(UNH) - Get Report

first-quarter earnings shot up 20% from a year ago, as acquisitions goosed revenue and several cost metrics showed marked improvement.

The HMO, whose reputation has been under attack for several weeks due to questions about how it compensates top executives, earned $899 million, or 63 cents a share, in the latest quarter, up from $743 million, or 55 cents a share, last year.

Pro forma to adjust for revenue-timing quirks associated with new Medicare legislation, UnitedHealth said it earned 68 cents a share in the most recent quarter, beating the Thomson First Call estimate by 4 cents.

First-quarter revenue rose 58% from a year ago to $17.59 billion, reflecting the acquisition of PacifiCare in 2005's fourth quarter, among other things. Analysts were forecasting revenue of $16.87 billion in the most recent quarter.

The latest quarter reflected a consolidated medical ratio, the main measure of cost efficiency in the managed care industry, of 81.5%, up 110 basis points from a year ago. Excluding the PacifiCare acquisition and normalizing for the new Medicare law, the ratio rose by 40 basis points.

For all of 2006, UnitedHealth says it now expects earnings to rise by 22% to 24%, up from its previous range of 21% to 23%.

"We are pleased to again report strong results, which reflect our continuing momentum in advancing health care solutions and services that work for participants in the broad health care marketplace," the company said. It said 2006's expected earnings will be "well supported by cash flows from operations in a range of $5.7 billion to $5.9 billion, an increase of $1.4 billion to $1.6 billion over the comparable 2005 result and well in excess of our estimated net income of approximately $4.1 billion."