UnitedHealth Group Inc. is doing well doing business with theU.S. government. Just not in Obamacare.

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The company has added more than a million customers in itsfederally-funded Medicare and Medicaid businesses since Dec. 31, bringing thetotal in the company’s public programs and seniors unit to 14.9million, it said in a statement Tuesday announcing first-quarterresults. It had a total medical membership of 49.3 million people,even after largely quitting the Affordable Care Act’s markets thatmany insurers once regarded as a source of millions of newcustomers.

Shares of the biggest publicly traded U.S. health insurer gained1.7 percent to $170 at 6:58 a.m. in New York, before the marketsopened. They’re up 31 percent in the last 12 months, as of Monday’sclose.

The company has been expanding in Medicare, where it offersprivate health plans for the elderly, and in Medicaid, where ithelps states manage low-income individuals. Those businesses haveproven to be more lucrative than Obamacare’s individual market,where UnitedHealth broadly retreated after offering plans on thehealth law’s exchanges in 34 states last year.

The trends in UnitedHealth’s government business will help boostprofits. The Minnetonka, Minnesota-based company predicted thatearnings for the full year, excluding some items, will be $9.65 to$9.85 a share. That’s well above the $9.51 projected by analysts,according to an average of estimates compiled by Bloomberg, andabove the company’s January forecast.

First-quarter earnings excluding some items were $2.37 a share,topping the $2.17 average of analysts’ estimates.

Distracted rivals

UnitedHealth has also benefited from the entanglement of itsmajor rivals in two massive deals. Humana Inc. and Aetna Inc., theNo. 2 and No. 3 sellers of private Medicare plans, in Februaryended their long effort to combine, after the transaction wasblocked by a federal judge. Anthem Inc. and Cigna Corp. areembroiled in several legal challenges tied to their merger attempt,and a key ruling could come this week.

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Health insurers are also getting a boost from a one-year pauseof a tax on the industry under the Affordable Care Act.UnitedHealth said the tax holiday pushed the company’s tax ratedown to 30 percent, and that it expects the full-year rate now tobe 32.5 percent.

The company’s technology, consulting and medical-care arm, knownas Optum, contributed to growth in the quarter. Optum postedoperating earnings of $1.28 billion, 16 percent higher than a yearearlier. Operating earnings at the health-insurance businessclimbed 15 percent to $2.13 billion.

UnitedHealth has used a series of acquisitions to expand Optum.In the first quarter, it acquired medical provider Surgical CareAffiliates Inc. in an about $2.3 billion deal. Surgical Care saidit serves about 1 million patients a year at its 205 facilities.The OptumHealth medical unit mainly consists of urgent care andprimary care, and saw revenue climb 18 percent in the quarter.

Growth was slower at the OptumRx pharmacy-benefits operation,where revenue increased 4.7 percent. The company acquired rivalpharmacy-benefits manager Catamaran Corp. in 2015.

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