UnitedHealth ( UNH) has enjoyed some healthier checkups.

Granted, the giant insurer has managed to grow profits by more than 30% for the 18th quarter in a row. But the company is known for barreling through expectations -- and it barely nudged past them this time around.

First-quarter profits jumped by 35% to hit 88 cents a share and beat the consensus estimate by a penny. In recent quarters, however, the company has delivered an average upside earnings surprise that's five times greater than the latest one. And this time around, UnitedHealth actually fell short in at least one vital area. First-quarter revenue of $8.14 billion, while up 17% from a year ago, came in 1.3% shy of expectations.

UnitedHealth investors, unaccustomed to such shortfalls, immediately punished the stock. Shares of the big insurer tumbled 6.4% to $62.60 following the company's Thursday morning conference call.

The plunge came despite reassurance from management that UnitedHealth is well-positioned to flourish even in tough economic climates.

"We have to figure out how to grow and earn more money in the face of this environment," admitted UnitedHealth CEO William McGuire. But "the company is performing very well at this early stage in the year. ... And we expect 2005 to prove to be an excellent year as well."

To punctuate its faith, the company once again raised its guidance for 2004. It now expects to deliver full-year earnings of $3.75 to $3.78 cents a share -- compared to the current consensus of $3.75 -- although its second-quarter forecast of 91 cents simply matches analyst expectations.

Erosion

Clearly, the economy continues to present challenges. During the latest quarter, Morgan Stanley analyst Christine Arnold calculates, UnitedHealth lost 120,000 customers -- almost twice her expectation -- in its risk-based commercial health division. The unit is particularly vulnerable to cutbacks by struggling corporations.

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