UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
  þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number
    001-31574
  AMERIGROUP
    Corporation
 (Exact name of registrant as
    specified in its charter)
  Delaware

54-1739323(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)4425 Corporation Lane,
    Virginia Beach, VA(Address of principal
    executive offices)

23462(Zip
    Code)    Registrants telephone number, including area code:
 (757) 490-6900
  þ o
  Regulation S-T o o
  Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Table
    of Contents
   Part I.
    Financial InformationItem 1.


Financial StatementsCondensed Consolidated Balance Sheets as of
    September 30, 2009 and December 31, 2008


3Condensed Consolidated Statements of Operations
    for the three and nine months ended September 30, 2009 and
    2008


4Condensed Consolidated Statement of
    Stockholders Equity for the nine months ended
    September 30, 2009


5Condensed Consolidated Statements of Cash Flows
    for the nine months ended September 30, 2009 and 2008


6Notes to Condensed Consolidated Financial
    Statements


7Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


22Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


35Item 4.


Controls and Procedures


35Part II.
    Other InformationItem 1.


Legal Proceedings


36Item 1A.


Risk Factors


36Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


36Item 3.


Defaults Upon Senior Securities


36Item 4.


Submission of Matters to a Vote of Security
    Holders


37Item 5.


Other Information


37Item 6.


Exhibits


37Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32   2




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##### 



Part I.
    Financial Information  Item 1.
    Financial
    Statements  AMERIGROUP
    Corporation And SubsidiariesCondensed Consolidated
    Balance
    Sheets (Dollars in thousands, except per share data)
    (Unaudited)
  September 30,


December 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
516,190


$
763,272Short-term investments


121,723



97,466Premium receivables


87,458



86,595Deferred income taxes


23,290



25,347Provider and other receivables


44,889



27,468Prepaid expenses


20,180



9,611Other current assets


5,307



5,202Total current assets


819,037



1,014,961Long-term investments


684,453



476,685Investments on deposit for licensure


105,452



94,978Property, equipment and software, net


101,133



103,747Other long-term assets


14,100



15,091Goodwill and other intangible assets, net


249,878



250,205Total assets

$
1,974,053


$
1,955,667LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Claims payable

$
550,112


$
536,107Accounts payable


3,115



6,810Unearned revenue


66,107



82,588Accrued payroll and related liabilities


33,071



62,469Accrued expenses and other


73,211



73,602Contractual refunds payable


56,056



34,740Current portion of long-term debt






506Total current liabilities


781,672



796,822Long-term convertible debt


232,610



225,130Long-term debt, less current portion






43,826Deferred income taxes


7,843



3,391Other long-term liabilities


10,046



13,839Total liabilities


1,032,171



1,083,008Stockholders equity:Common stock, $0.01 par value. Authorized
    100,000,000 shares; issued andoutstanding 50,613,875 and 52,673,363 at September 30, 2009
    andDecember 31, 2008, respectively


543



539Additional paid-in capital


484,579



466,926Accumulated other comprehensive income (loss)


2,227



(4,022
)Retained earnings


550,410



441,3531,037,759



904,796Less treasury stock at cost (3,660,290 and 1,207,510 shares
    at September 30, 2009 andDecember 31, 2008, respectively)


(95,877
)


(32,137
)Total stockholders equity


941,882



872,659Total liabilities and stockholders equity

$
1,974,053


$
1,955,667    3




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries Condensed
    Consolidated Statements of Operations (Dollars
    in thousands, except per share data)
    (Unaudited)
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Revenues:Premium

$
1,298,969


$
1,080,367


$
3,801,306


$
3,228,727Investment income and other


5,315



17,624



24,179



58,696Total revenues


1,304,284



1,097,991



3,825,485



3,287,423Expenses:Health benefits


1,136,391



885,774



3,258,907



2,672,166Selling, general and administrative


82,238



112,222



288,898



332,104Premium tax


38,336



23,906



101,077



68,051Depreciation and amortization


8,441



8,811



26,447



26,459Litigation settlement














234,205Interest


3,929



5,082



12,399



16,107Total expenses


1,269,335



1,035,795



3,687,728



3,349,092Income (loss) before income taxes


34,949



62,196



137,757



(61,669
)Income tax expense


12,400



24,270



28,700



30,800Net income (loss)

$
22,549


$
37,926


$
109,057


$
(92,469
)Net income (loss) per share:Basic net income (loss) per share

$
0.44


$
0.72


$
2.09


$
(1.75
)Weighted-average number of common shares outstanding


51,320,346



52,694,077



52,063,012



52,914,156Diluted net income (loss) per share

$
0.43


$
0.71


$
2.07


$
(1.75
)Weighted-average number of common shares and dilutive potential
    common shares outstanding


51,920,745



53,494,690



52,754,511



52,914,156    4




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries Condensed
    Consolidated Statement of Stockholders Equity
    Nine Months Ended September 30, 2009 (Dollars
    in thousands)
    (Unaudited)
  AccumulatedAdditional


Other











TotalCommon Stock


Paid-in


Comprehensive


Retained


Treasury Stock


StockholdersShares


Amount


Capital


Income (Loss)


Earnings


Shares


Amount


EquityBalances at December 31, 2008


52,673,363


$
539


$
466,926


$
(4,022
)

$
441,353



1,207,510


$
(32,137
)

$
872,659Common stock issued upon exercise of stock options, vesting of
    restricted stock grants and purchases under the employee stock
    purchase plan


393,292



4



4,537



















4,541Compensation expense related to share-based payments










12,034



















12,034Tax benefit from exercise of stock options










1,082



















1,082Common stock redeemed for payment of employee taxes and stock
    option exercises


(34,428
)


















34,428



(912
)


(912
)Common stock repurchases


(2,418,352
)


















2,418,352



(62,828
)


(62,828
)Unrealized gain on
    held-to-maturity
    investment portfolio at time of transfer to
    available-for-sale,
    net of tax














3,030















3,030Unrealized gain on
    available-for-sale
    securities, net of tax














3,219















3,219Net income


















109,057











109,057Balances at September 30, 2009


50,613,875


$
543


$
484,579


$
2,227


$
550,410



3,660,290


$
(95,877
)

$
941,882    5




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries Condensed
    Consolidated Statements of Cash Flows (Dollars
    in thousands)
    (Unaudited)
  Nine Months EndedSeptember 30,2009


2008Cash flows from operating activities:Net income (loss)

$
109,057


$
(92,469
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


26,447



26,459Loss on disposal of property, equipment and software


289



442Deferred tax expense (benefit)


2,481



(2,364
)Compensation expense related to share-based payments


12,034



7,702Convertible debt non-cash interest expense


7,480



7,008Impairment of goodwill






8,808Gain on sale of contract rights


(5,810
)


Other


(326
)


Changes in assets and liabilities (decreasing) increasing cash
    flows fromoperations:Premium receivables


(863
)


10,480Prepaid expenses, provider and other receivables and other
    current assets


(26,534
)


27,781Other assets


(1,146
)


(942
)Claims payable


14,005



(13,131
)Accounts payable, accrued expenses, contractual refunds payable
    andother current liabilities


(10,245
)


5,342Unearned revenue


(16,481
)


(14,394
)Other long-term liabilities


(3,793
)


(98
)Net cash provided by (used in) operating activities


106,595



(29,376
)Cash flows from investing activities:Release of restricted investments held as collateral






351,318Proceeds from sale of trading securities


850



Proceeds from sale of
    available-for-sale
    securities


129,629



105,677Purchase of
    available-for-sale
    securities


(430,740
)


(89,502
)Proceeds from redemption of
    held-to-maturity
    securities


273,125



437,215Purchase of
    held-to-maturity
    securities


(194,851
)


(451,058
)Purchase of property, equipment and software


(21,680
)


(27,547
)Proceeds from redemption of investments on deposit for licensure


55,454



44,494Purchase of investments on deposit for licensure


(65,355
)


(49,051
)Proceeds from sale of contract rights


5,810



Net cash (used in) provided by investing activities


(247,758
)


321,546Cash flows from financing activities:Repayment of borrowings under credit facility


(44,318
)


(79,025
)Net (decrease) increase in bank overdrafts


(2,492
)


1,553Payment of capital lease obligations






(357
)Customer funds administered


(1,561
)


Proceeds from exercise of stock options and employee stock
    purchases


4,198



4,590Repurchase of common stock shares


(62,828
)


(22,890
)Tax benefit related to exercise of stock options


1,082



1,201Net cash used in financing activities


(105,919
)


(94,928
)Net (decrease) increase in cash and cash equivalents


(247,082
)


197,242Cash and cash equivalents at beginning of period


763,272



487,614Cash and cash equivalents at end of period

$
516,190


$
684,856Non-cash disclosures:Common stock redeemed for payment of employee taxes and stock
    optionexercises

$
(912
)

$
(597
)Unrealized gain on  held-to-maturity portfolio at time of
    transfer to
    available-for-sale,
    net of tax

$
3,030


$
Unrealized gain (loss) on
    available-for-sale
    securities, net of tax

$
3,219


$
(2,030
)Deferred tax asset related to convertible note hedge instruments

$



$
165    6




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries Notes
    to Condensed Consolidated Financial Statements (Dollars
    in thousands, except per share data)
    (Unaudited)
  1. Interim Financial Reporting
  Basis
    of Presentation
    Form 10-K
  and/or Form 10-Q
  Reclassifications
    
    The experience rebate under the Companys contract with the
    State of Texas has been reclassified out of selling, general and
    administrative expenses and is now reflected as a reduction to
    premium revenue.
    Premium tax has been reclassified out of selling, general and
    administrative expenses and is now reported on a separate line
    following selling, general and administrative expenses and
    before depreciation and amortization. By isolating premium tax,
    the impacts of changing business volumes on premium tax expense
    will become more apparent.    7




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
   2. Earnings per Share
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Basic net income (loss) per share:Net income (loss)

$
22,549


$
37,926


$
109,057


$
(92,469
)Weighted-average number of common shares outstanding


51,320,346



52,694,077



52,063,012



52,914,156Basic net income (loss) per share

$
0.44


$
0.72


$
2.09


$
(1.75
)Diluted net income (loss) per share:Net income (loss)

$
22,549


$
37,926


$
109,057


$
(92,469
)Weighted-average number of common shares outstanding


51,320,346



52,694,077



52,063,012



52,914,156Dilutive effect of stock options and non-vested stock awards (as
    determined by applying the treasury stock method)


600,399



800,613



691,499



Weighted-average number of common shares and dilutive potential
    common shares outstanding


51,920,745



53,494,690



52,754,511



52,914,156Diluted net income (loss) per share

$
0.43


$
0.71


$
2.07


$
(1.75
)        8




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
   3. Recent Accounting Standards
  Codification
  The tm and the Hierarchy of Generally Accepted Accounting
    Principles  a replacement of FASB Statement
    No. 162 FASB Accounting Standards
    Codificationtm
  Fair
    Value
    other-than-temporary-impairments
    Convertible
    Debt Instruments
   9




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
        Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Interest expense:Non-cash interest

$
2,493


$
2,336


$
7,480


$
7,008Cash interest


1,300



1,300



3,900



3,900Total interest expense

$
3,793


$
3,636


$
11,380


$
10,908     Three Months Ended


Nine Months EndedSeptember 30, 2008


September 30, 2008As


As


Effect of


As


As


Effect ofReported


Adjusted


Change


Reported


Adjusted


ChangeCondensed Consolidated Statements of OperationsInterest expense

$
2,746


$
5,082


$
2,336


$
9,099


$
16,107


$
7,008Income (loss) before income taxes


64,532



62,196



(2,336
)


(54,661
)


(61,669
)


(7,008
)Income tax expense


25,097



24,270



(827
)


33,350



30,800



(2,550
)Net income (loss)


39,435



37,926



(1,509
)


(88,011
)


(92,469
)


(4,458
)Basic net income (loss) per share


0.75



0.72



(0.03
)


(1.66
)


(1.75
)


(0.09
)Diluted net income (loss) per share


0.74



0.71



(0.03
)


(1.66
)


(1.75
)


(0.09
)   10




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  December 31, 2008As


As


Effect ofReported


Adjusted


ChangeCondensed Consolidated Balance SheetDeferred income tax assets

$
34,645


$
25,347


$
(9,298
)Long-term convertible debt


260,000



225,130



(34,870
)Deferred income tax liabilities






3,391



3,391Additional paid-in capital


434,578



466,926



32,348Retained earnings


451,520



441,353



(10,167
)     As of

As ofSeptember 30,

December 31,2009

2008Carrying amount of the equity component

$
50,885


$
50,885Principal amount of the liability component

$
260,000


$
260,000Unamortized discount of the liability component

$
27,390


$
34,870Net carrying amount of the liability component

$
232,610


$
225,130Remaining amortization period of discount


32 months



41 monthsConversion price per share

$
42.53


$
42.53Number of shares to be issued upon conversion


6,112,964



6,112,964Effective interest rate on liability component


6.74
%


6.74
%   Other
    4. Fair Value Measurements
    Cash and cash equivalents, premium receivables, provider and
    other receivables, prepaid expenses, other current assets,
    claims payable, accounts payable, unearned revenue, accrued
    payroll and related liabilities, accrued expenses and other
    current liabilities, and contractual refunds payable:
  Short-term investments, long-term investments, investments on
    deposit for licensure and forward contracts related to certain
    auction rate securities (included in other long-term
    assets):
  Cash surrender value of life insurance policies (included in
    other long-term assets):
 11




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  Convertible Senior Notes:
      Fair Value Measurements at Reporting Date UsingQuoted Prices in





SignificantActive Markets for


Significant Other


UnobservableIdentical Assets


Observable Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Cash equivalents

$
443,772


$
443,772


$



$
Trading securities


15,096











15,096Auction rate securities
    (available-for-sale)


50,813











50,813Available for sale securities


845,719



510,317



335,402



Forward contract related to auction rate securities


1,992











1,992Total assets measured at fair value

$
1,357,392


$
954,089


$
335,402


$
67,901     Three Months Ended


Nine Months EndedSeptember 30,


September 30,Beginning balance

$
68,609


$
73,654Total unrealized gains included in other comprehensive income


17



1,635Total realized gains included in earnings


125



312Settlements


(850
)


(7,700
)Balance at September 30, 2009

$
67,901


$
67,901     available-for-sale available-for-sale.
 12




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    available-for-sale
  5. Investments
  available-for-sale, available-for-sale held-to-maturity held-to-maturity held-to-maturity held-to-maturity available-for-sale
 13




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  available-for-sale
  GrossGross


UnrealizedAmortized


Unrealized


Holding


FairCost


Holding Gains


Losses


ValueAvailable-for-sale
    securities:Certificates of deposit

$
39,005


$



$
3


$
39,002Commercial paper


11,977



3



6



11,974Corporate bonds


1,026







1



1,025Debt securities of government sponsored entities


60,227



39



20



60,246Municipal bonds


9,479



2



5



9,476Total short-term investments

$
121,714


$
44


$
35


$
121,723   available-for-sale
  GrossGross


UnrealizedAmortized


Unrealized


Holding


FairCost


Holding Gains


Losses


ValueAvailable-for-sale
    securities:Auction rate securities, maturing between one year and five years

$
4,000


$



$
258


$
3,742Auction rate securities, maturing in greater than ten years


51,550







4,479



47,071Corporate bonds, maturing within one year


28,369



215







28,584Corporate bonds, maturing between one year and five years


143,607



1,994



20



145,581Debt securities of government sponsored entities, maturing
    within one year


59,156



868







60,024Debt securities of government sponsored entities, maturing
    between one year and five years


246,540



2,110



27



248,623Federally insured corporate bonds  maturing between
    one year and five years


46,279



855



12



47,122Municipal bonds, maturing between one year and five years


6,644



102



16



6,730Municipal bonds, maturing between five years and ten years


26,500



831







27,331Municipal bonds, maturing in greater than ten years


53,395



1,154







54,549Total long-term investments

$
666,040


$
8,129


$
4,812


$
669,357  14




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    Purchase


Realized


Realized


FairAmount


Gains


Losses


ValueTrading securities:Auction rate securities, maturing in greater than ten years

$
17,000


$



$
1,904


$
15,096   available-for-sale
  GrossGross


UnrealizedAmortized


Unrealized


Holding


FairCost


Holding Gains


Losses


ValueCash

$
343


$



$



$
343Certificates of deposit, maturing within one year


11,150











11,150Debt securities of government sponsored entities, maturing
    within one year


938











938Debt securities of government sponsored entities, maturing
    between one year and five years


44,037



402







44,439Money market funds


30,473











30,473U.S. Treasury securities, maturing within one year


9,825



18







9,843U.S. Treasury securities, maturing between one year and five
    years


8,113



153







8,266Total

$
104,879


$
573


$



$
105,452  15




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  available-for-sale other-than-temporarily
  Less than 12 Months


12 Months or GreaterGross








GrossUnrealized








UnrealizedFair


Holding


Total Number


Fair


Holding


Total NumberValue


Losses


of Securities


Value


Losses


of SecuritiesAuction rate securities

$



$







$
50,813


$
4,737



15Certificate of deposit


2,997



3



1











Commercial paper


5,978



6



2











Corporate bonds


14,264



21



14











Debt securities of government sponsored entities


24,491



47



7











Federally insured corporate bond


4,083



12



1











Municipal bonds


8,940



21



5











Total temporarily impaired securities

$
60,753


$
110



30


$
50,813


$
4,737



15     6. Market Updates
  Tennessee
    New
    Jersey
   16




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  Ohio
    Florida
    South
    Carolina
    Nevada
    New
    Mexico
    7. Long-Term Obligations
  Credit
    Agreement
   17




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
      Convertible
    Senior Notes
  Form S-3
    and/or and/or
   18




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
      8. Share Repurchase Program
    9. Contingencies
  Legal
    Proceedings
  Purchase
    Agreement Litigation
    Centene Corporation
    and University Health Plans, Inc. v. AMERIGROUP New Jersey,
    Inc. and AMERIGROUP Corporation
   19




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  Risk
    Sharing Receivable
  no. 153-232258-08.
    Other
    Litigation
    10. Significant Income Tax Uncertainties
  qui
    tam
 20




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  11. Comprehensive Earnings
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Net income (loss)

$
22,549


$
37,926


$
109,057


$
(92,469
)Unrealized gain on held-to-maturity investment portfolio at time
    of transfer to available-for-sale, net of tax


3,030







3,030



Unrealized gain (loss) on available-for-sale securities, net of
    tax


2,923



824



3,219



(2,030
)Total change


5,953



824



6,249



(2,030
)Comprehensive income (loss)

$
28,502


$
38,750


$
115,306


$
(94,499
)  21




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-looking
    Statements
  Form 10-Q, time-to-time,
    
    local, state and national economic conditions, including their
    effect on the rate increase process and timing of payments;
    the effect of government regulations and changes in regulations
    governing the healthcare industry;
    changes in Medicaid and Medicare payment levels and
    methodologies;
    liabilities and other claims asserted against us;
    our ability to attract and retain qualified personnel;
    our ability to maintain compliance with all minimum capital
    requirements;
    the availability and terms of capital to fund acquisitions and
    capital improvements;
    the competitive environment in which we operate;
    our ability to maintain and increase membership levels;
    demographic changes;
    increased use of services, increased cost of individual
    services, pandemics, epidemics, the introduction of new or
    costly treatments and technology, new mandated benefits, insured
    population characteristics and seasonal changes in the level of
    healthcare use;
    our ability to enter into new markets or remain in our existing
    markets;
    our inability to operate new products and markets at expected
    levels, including, but not limited to, profitability, membership
    and targeted service standards;
    changes in market interest rates or any disruptions in the
    credit markets;
    catastrophes, including acts of terrorism or severe
    weather; and
    the unfavorable resolution of new or pending litigation.  Form 10-K Other
    Information Risk Factors
 22




---



##### 



Overview
    Summary
    highlights for the periods ended September 30, 2009
    include:
  
    Membership of approximately 1,778,000 as of September 30,
    2009. Risk membership increased 13.9%, or approximately 216,000
    members, from September 30, 2008 to September 30, 2009;
    Total revenues of $1.3 billion for the third quarter of
    2009, an 18.8% increase over the third quarter of 2008;
    Health benefits ratio (HBR) of 87.5% of premium
    revenues for the third quarter of 2009 compared to 82.0% in the
    third quarter of 2008;
    Selling, general and administrative expense
    (SG&A) ratio of 6.3% of total revenues for the
    third quarter of 2009 compared to 10.2% in the third quarter of
    2008;
    Cash flow from operations was $106.6 million for the nine
    months ended September 30, 2009;
    Unregulated cash and investments of $277.2 million as of
    September 30, 2009;
    We repaid the remaining $18.0 million of outstanding debt
    under our Credit and Guaranty Agreement (the Credit
    Agreement) during the three months ended
    September 30, 2009, decreasing our debt to total capital
    ratio to 19.8%;
    We repurchased approximately 1,416,000 shares of common
    stock for $34.3 million during the third quarter of 2009.     23




---



##### 



Market
    Updates
  Tennessee
    New
    Jersey
    Ohio
    Florida
   24




---



##### 



South
    Carolina
    Nevada
    New
    Mexico
      Reclassifications
    
    The experience rebate under our contract with the State of Texas
    has been reclassified out of selling, general and administrative
    expenses and is now reflected as a reduction to premium revenue.
    Premium tax has been reclassified out of selling, general and
    administrative expenses and is now reported on a separate line
    following selling, general and administrative expenses and
    before depreciation and amortization. By isolating premium tax,
    the impacts of changing business volumes on premium tax expense
    will become more apparent.   25




---



##### 



Results
    of Operations
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2009


2008


2009


2008Premium revenue


99.6
%


98.4
%


99.4
%


98.2
%Investment income and other


0.4



1.6



0.6



1.8Total revenue


100.0
%


100.0
%


100.0
%


100.0
%Health
    benefits(1)


87.5
%


82.0
%


85.7
%


82.8
%Selling, general and administrative expenses


6.3
%


10.2
%


7.6
%


10.1
%Income (loss) before income taxes


2.7
%


5.7
%


3.6
%


(1.9
)%Net income (loss)


1.7
%


3.5
%


2.9
%


(2.8
)%     (1)
    
    The HBR is shown as a percentage of premium revenue because
    there is a direct relationship between the premium received and
    the health benefits provided.  Three and
    Nine Months Ended September 30, 2009 Compared to Three and
    Nine Months Ended September 30, 2008
    Three Months


Nine MonthsThree Months


Nine Months


Ended


EndedEnded


Ended


September 30,


September 30,September 30,


September 30,


% Change


% Change2009


2008


2009


2008


2009-2008


2009-2008Revenues:Premium

$
1,299.0


$
1,080.4


$
3,801.3


$
3,228.7



20.2
%


17.7
%Investment income and other


5.3



17.6



24.2



58.7



(69.8
)%


(58.8
)%Total revenues


1,304.3



1,098.0



3,825.5



3,287.4



18.8
%


16.4
%Expenses:Health benefits


1,136.4



885.8



3,258.9



2,672.2



28.3
%


22.0
%Selling, general and administrative


82.2



112.2



288.9



332.1



(26.7
)%


(13.0
)%Premium tax


38.3



23.9



101.1



68.1



60.4
%


48.5
%Depreciation and amortization


8.4



8.8



26.4



26.5



(4.2
)%


0.0
%Litigation settlement














234.2



*



*Interest


3.9



5.1



12.4



16.1



(22.7
)%


(23.0
)%Total expenses


1,269.3



1,035.8



3,687.7



3,349.1



22.5
%


10.1
%Income (loss) before income taxes


34.9



62.2



137.8



(61.7
)


(43.8
)%


*Income tax expense


12.4



24.3



28.7



30.8



(48.9
)%


(6.8
)%Net income (loss)

$
22.5


$
37.9


$
109.1


$
(92.5
)


(40.5
)%


*Diluted net income (loss) per share

$
0.43


$
0.71


$
2.07


$
(1.75
)


(39.4
)%


*    *
    
    Not meaningful. 26




---



##### 



Revenues
  Premium
    revenue
    Membership
    September 30,2009

2008Texas(1)


498,000



462,000Florida


270,000



228,000Georgia


236,000



201,000Tennessee(2)


192,000



352,000Maryland


188,000



161,000New Jersey


117,000



103,000New York


112,000



111,000Ohio


59,000



56,000Nevada


56,000



Virginia


30,000



24,000New Mexico


20,000



7,000South
    Carolina(3)






9,000Total


1,778,000



1,714,000     (1)
    
    Included in Texas membership are approximately 13,000 members
    under an Administrative Services Only (ASO) contract
    in 2009.(2)
    
    Included in Tennessee membership are approximately 165,000
    members under an ASO contract in 2008. This contract terminated
    October 31, 2008.(3)
    
    The contract with South Carolina terminated March 1, 2009
    concurrent with the sale of our rights under the contract.   27




---



##### 



Product

2009

2008TANF
    (Medicaid)(1)(3)


1,245,000



1,205,000CHIP(3)


259,000



241,000Aged Blind or Disabled
    (Medicaid)(2)


202,000



218,000FamilyCare (Medicaid)


58,000



41,000Medicare Advantage


14,000



9,000Total


1,778,000



1,714,000     (1)
    
    Membership includes approximately 124,000 members under an ASO
    contract in 2008 that terminated on October 31, 2008.(2)
    
    Membership includes approximately 13,000 members under an ASO
    contract in Texas in 2009 and approximately 41,000 members under
    an ASO contract in Tennessee in 2008 that terminated on
    October 31, 2008.(3)
    
    Reflects a reclassification from CHIP to TANF to coincide with
    state classifications.  Investment
    income and other
        Health
    benefits expenses
   28




---



##### 



Selling,
    general and administrative expenses
      Premium
    tax expense
    Depreciation
    and amortization expenses
    Interest
    expense
    Provision
    for Income Taxes
  qui tam
 29




---



##### 



Liquidity
    and capital resources
      Credit
    Agreement
      Convertible
    Senior Notes
  Form S-3
 30




---



##### 



and/or and/or
        Universal
    Automatic Shelf Registration
    Share
    Repurchase Program
   31




---



##### 



Cash and
    Investments
      available-for-sale, available-for-sale held-to-maturity held-to-maturity investments-on-deposit, held-to-maturity held-to-maturity investments-on-deposit, available-for-sale
   32




---



##### 



available-for-sale 28-35 days available-for-sale.
      debt-to-total
 33




---



##### 



Regulatory
    Capital and Dividend Restrictions
      Recent
    Accounting Standards
  Convertible
    Debt Instruments
   34




---



##### 



Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk      time-to-time
  Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures. Rules 13a-15(e) 15d-15(e)
 35




---



##### 



Changes in Internal Controls over Financial
    Reporting.
 Part II.
    Other Information  Item 1.
    Legal
    Proceedings  Form 10-Q
  Item 1A.
    Risk
    Factors  Risk Factors, Form 10-K
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds  Approximate DollarTotal Number of


Value of Shares (orAverage


Shares (or Units)


Units) that May YetTotal Number of


Price Paid


Purchased as Part of


Be PurchasedShares (or Units)


per Share


Publicly Announced


Under the Plans orPurchased


(or Unit)


Plans or
    Programs(1)


Programs(1)(2)(3)July 1  July 31,
    2009(3)


(88,962
)

$
27.22



(88,962
)


N/AAugust 1  August 31,
    2009(2)


(1,231,309
)


24.02



(1,231,309
)

$
172,041,766September 1  September 30, 2009


(95,657
)


23.75



(95,657
)


169,769,830Total


(1,415,928
)

$
24.21



(1,415,928
)

$
169,769,830     (1)
    
    All of the shares purchased during the third quarter of 2009
    were purchased as part of the Companys existing authorized
    share repurchase program.(2)
    
    On August 5, 2009, the Board of Directors authorized an
    increase to the Companys on-going share repurchase program
    that allows the Company to repurchase up to $200 million of
    shares of its common stock. The $200 million authorization
    is for repurchases made from and after August 5, 2009.(3)
    
    Prior to the August 5, 2009 action by the Board of
    Directors, share repurchase authorization limits were expressed
    in number of shares. Since the August 5, 2009 authorization
    replaced all prior authorizations, disclosure of the remaining
    number of shares as of July 31, 2009 is no longer
    applicable.  Item 3.
    Defaults
    Upon Senior Securities   36




---



##### 



Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information  07-16936-00)
  Item 6.
    Exhibits  Form 10-Q Form 10-Q.
  Form 10-Q
  
    should not in all instances be treated as categorical statements
    of fact, but rather as a way of allocating the risk to one of
    the parties if those statements prove to be inaccurate;
    have been qualified by disclosures that were made to the other
    party in connection with the negotiation of the applicable
    agreement, which disclosures are not necessarily reflected in
    the agreement;
    may apply standards of materiality in a way that is different
    from what may be viewed as material to you or other
    investors; and
    were made only as of the date of the applicable agreement or
    such other date or dates as may be specified in the agreement
    and are subject to more recent developments.  Form 10-Q Form 10-Q, Form 10-K http://www.sec.gov.
  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation of the Company
    (incorporated by reference to exhibit 3.1 to our
    Registration Statement on
    Form S-3
    (No. 333-108831)).3
.2

Amended and Restated By-Laws of the Company (incorporated by
    reference to exhibit 3.1 to our Current Report on
    Form 8-K
    filed on February 14, 2008).4
.1

Form of share certificate for common stock (incorporated by
    reference to exhibit 4.1 to our Registration Statement on
    Form S-l
    (No. 333-347410)).4
.2

Indenture related to the 2.0% Convertible Senior Notes due
    2012 dated March 28, 2007, between AMERIGROUP Corporation
    and The Bank of New York, as trustee (including the form of
    2.0% Convertible Senior Note due 2012) (incorporated by
    reference to exhibit 4.1 to our Current Report on
    Form 8-K
    filed on April 2, 2007).4
.3

Registration Rights Agreement dated March 28, 2007, between
    AMERIGROUP Corporation, Goldman Sachs, & Co., as
    representative of the initial purchasers (incorporated by
    reference to exhibit 4.2 to our Current Report on
    Form 8-K
    filed on April 2, 2007).*10
.1

Medical Contract between the State of Florida, Agency for Health
    Administration and AMERIGROUP Florida, Inc. (Contract FA913),
    filed herewith. 37




---



##### 



ExhibitNumber

Description*10
.2

Amendment effective September 1, 2009, to the Health and
    Human Services Commission Agreement for Health Services to the
    STAR, STAR+PLUS, CHIP, CHIP Perinatal programs in the Bexar,
    Dallas, Harris, Nueces, Tarrant and Travis Service Delivery
    Areas effectively extending the contract through August 31,
    2010, filed herewith.*10
.3

Amendment No. 7 dated September 23, 2009 between
    Georgia Department of Community Health and AMGP Georgia Managed
    Care Company, Inc. for the period from July 1, 2009 through
    June 30, 2010, filed herewith.10
.4

Amendment No. 4 to Contract Risk Agreement between the
    State of Tennessee and AMERIGROUP Tennessee, Inc. effective
    September 1, 2009, filed herewith.10
.5

Amendment to AMERIGROUP Corporation 2009 Equity Incentive Plan
    dated August 5, 2009 (incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on August 10, 2009).10
.6

Amendment No. 2 to Executive Employment Agreement dated
    August 4, 2009 between AMERIGROUP Corporation and James G.
    Carlson (incorporated by reference to Exhibit 10.2 to our
    Current Report on
    Form 8-K
    filed on August 10, 2009).10
.7

Retirement and Employment Agreement for Stanley F. Baldwin dated
    August 4, 2009 (incorporated by reference to
    Exhibit 10.3 to our Current Report on
    Form 8-K
    filed on August 10, 2009).14
.1

AMERIGROUP Corporation Code of Business Conduct and Ethics
    (incorporated by reference to Exhibit 14.1 to our Current
    Report on
    Form 8-K
    filed on August 10, 2009).31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    November 4, 2009.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    November 4, 2009.32


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of Sarbanes-Oxley Act of
    2002, dated November 4, 2009.     *
    
    The Company has requested confidential treatment of the redacted
    portions of this exhibit pursuant to
    Rule 24b-2,
    under the Securities Exchange Act of 1934, as amended, and has
    separately filed a complete copy of this exhibit with the
    Securities and Exchange Commission. 38




---



##### 



Signatures
  Pursuant to the requirements of the Securities Exchange Act
    of 1934, the Registrant has duly caused this Report to be signed
    on its behalf by the undersigned thereunto duly authorized.
  AMERIGROUP Corporation
  By:
    /s/  James
    G. Carlson   Chairman, Chief Executive
 Officer and President
    By:
    /s/  James
    W. Truess   Chief Financial Officer and
 Executive Vice President
   39




---



##### 



EXHIBITS
  Exhibits.
  Form 10-Q Form 10-Q.
  Form 10-Q
  
    should not in all instances be treated as categorical statements
    of fact, but rather as a way of allocating the risk to one of
    the parties if those statements prove to be inaccurate;
    have been qualified by disclosures that were made to the other
    party in connection with the negotiation of the applicable
    agreement, which disclosures are not necessarily reflected in
    the agreement;
    may apply standards of materiality in a way that is different
    from what may be viewed as material to you or other
    investors; and
    were made only as of the date of the applicable agreement or
    such other date or dates as may be specified in the agreement
    and are subject to more recent developments.  Form 10-Q Form 10-Q, Form 10-K http://www.sec.gov.
  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation of the Company
    (incorporated by reference to exhibit 3.1 to our
    Registration Statement on
    Form S-3
    (No. 333-108831)).3
.2

Amended and Restated By-Laws of the Company (incorporated by
    reference to exhibit 3.1 to our Current Report on
    Form 8-K
    filed on February 14, 2008).4
.1

Form of share certificate for common stock (incorporated by
    reference to exhibit 4.1 to our Registration Statement on
    Form S-l
    (No. 333-347410)).4
.2

Indenture related to the 2.0% Convertible Senior Notes due
    2012 dated March 28, 2007, between AMERIGROUP Corporation
    and The Bank of New York, as trustee (including the form of
    2.0% Convertible Senior Note due 2012) (incorporated by
    reference to exhibit 4.1 to our Current Report on
    Form 8-K
    filed on April 2, 2007).4
.3

Registration Rights Agreement dated March 28, 2007, between
    AMERIGROUP Corporation, Goldman Sachs, & Co., as
    representative of the initial purchasers (incorporated by
    reference to exhibit 4.2 to our Current Report on
    Form 8-K
    filed on April 2, 2007).*10
.1

Medical Contract between the State of Florida, Agency for Health
    Administration and AMERIGROUP Florida, Inc. (Contract FA913),
    filed herewith.*10
.2

Amendment effective September 1, 2009, to the Health and
    Human Services Commission Agreement for Health Services to the
    STAR, STAR+PLUS, CHIP, CHIP Perinatal programs in the Bexar,
    Dallas, Harris, Nueces, Tarrant and Travis Service Delivery
    Areas effectively extending the contract through August 31,
    2010, filed herewith.*10
.3

Amendment No. 7 dated September 23, 2009 between
    Georgia Department of Community Health and AMGP Georgia Managed
    Care Company, Inc. for the period from July 1, 2009 through
    June 30, 2010, filed herewith.10
.4

Amendment No. 4 to Contract Risk Agreement between the
    State of Tennessee and AMERIGROUP Tennessee, Inc. effective
    September 1, 2009, filed herewith. 40




---



##### 



ExhibitNumber

Description10
.5

Amendment to AMERIGROUP Corporation 2009 Equity Incentive Plan
    dated August 5, 2009 (incorporated by reference to
    Exhibit 10.1 to our Current Report on
    Form 8-K
    filed on August 10, 2009).10
.6

Amendment No. 2 to Executive Employment Agreement dated
    August 4, 2009 between AMERIGROUP Corporation and James G.
    Carlson (incorporated by reference to Exhibit 10.2 to our
    Current Report on
    Form 8-K
    filed on August 10, 2009).10
.7

Retirement and Employment Agreement for Stanley F. Baldwin dated
    August 4, 2009 (incorporated by reference to
    Exhibit 10.3 to our Current Report on
    Form 8-K
    filed on August 10, 2009).14
.1

AMERIGROUP Corporation Code of Business Conduct and Ethics
    (incorporated by reference to Exhibit 14.1 to our Current
    Report on
    Form 8-K
    filed on August 10, 2009).31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    November 4, 2009.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    November 4, 2009.32


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of Sarbanes-Oxley Act of
    2002, dated November 4, 2009.     *
    
    The Company has requested confidential treatment of the redacted
    portions of this exhibit pursuant to
    Rule 24b-2,
    under the Securities Exchange Act of 1934, as amended, and has
    separately filed a complete copy of this exhibit with the
    Securities and Exchange Commission. 41