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
    June 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(State or Other Jurisdiction
    of
    Incorporation or Organization)

54-1739323(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




---



##### 



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


Financial Statements


3Condensed Consolidated Balance Sheets as of
    June 30, 2009 and December 31, 2008


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


4Condensed Consolidated Statement of
    Stockholders Equity for the six months ended June 30,
    2009


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


6Notes to Condensed Consolidated Financial
    Statements


7Item 2.


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


21Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


33Item 4.


Controls and Procedures


34Part II.
    Other InformationItem 1.


Legal Proceedings


35Item 1A.


Risk Factors


35Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


35Item 3.


Defaults Upon Senior Securities


35Item 4.


Submission of Matters to a Vote of Security
    Holders


35Item 5.


Other Information


36Item 6.


Exhibits


36  2




---



##### 



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


December 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
654,491


$
763,272Short-term investments


24,906



97,466Premium receivables


102,278



86,595Deferred income taxes


23,101



25,347Provider and other receivables


44,593



27,468Prepaid expenses


32,316



9,611Other current assets


5,064



5,202Total current assets


886,749



1,014,961Long-term investments


622,909



476,685Investments on deposit for licensure


98,891



94,978Property, equipment and software, net


103,187



103,747Other long-term assets


13,564



15,091Goodwill and other intangible assets, net


249,968



250,205Total assets

$
1,975,268


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

$
562,990


$
536,107Accounts payable


2,347



6,810Unearned revenue


64,427



82,588Accrued payroll and related liabilities


37,796



62,469Accrued expenses and other


98,950



108,342Current portion of long-term debt


211



506Total current liabilities


766,721



796,822Long-term convertible debt


230,117



225,130Long-term debt, less current portion


17,789



43,826Deferred income taxes


6,377



3,391Other long-term liabilities


11,256



13,839Total liabilities


1,032,260



1,083,008Stockholders equity:Common stock, $0.01 par value. Authorized
    100,000,000 shares; issued and outstanding 51,997,798 and
    52,673,363 at June 30, 2009 and December 31, 2008,
    respectively


542



539Additional paid-in capital


479,935



466,926Accumulated other comprehensive loss


(3,726
)


(4,022
)Retained earnings


527,861



441,3531,004,612



904,796Less treasury stock at cost (2,244,362 and 1,207,510 shares
    at June 30, 2009 and December 31, 2008, respectively)


(61,604
)


(32,137
)Total stockholders equity


943,008



872,659Total liabilities and stockholders equity

$
1,975,268


$
1,955,667    3




---



##### 



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


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Revenues:Premium

$
1,284,890


$
1,098,356


$
2,502,337


$
2,148,360Investment income and other


6,517



18,463



18,864



41,072Total revenues


1,291,407



1,116,819



2,521,201



2,189,432Expenses:Health benefits


1,103,213



911,471



2,122,516



1,786,392Selling, general and administrative


96,285



113,140



206,660



219,882Premium tax


34,623



22,119



62,741



44,145Litigation settlement






234,205







234,205Depreciation and amortization


9,680



8,871



18,006



17,648Interest


4,232



5,235



8,470



11,025Total expenses


1,248,033



1,295,041



2,418,393



2,313,297Income (loss) before income taxes


43,374



(178,222
)


102,808



(123,865
)Income tax (benefit) expense


(6,225
)


(14,190
)


16,300



6,530Net income (loss)

$
49,599


$
(164,032
)

$
86,508


$
(130,395
)Net income (loss) per share:Basic net income (loss) per share

$
0.95


$
(3.10
)

$
1.65


$
(2.46
)Weighted-average number of common shares outstanding


52,308,721



52,953,851



52,488,010



53,064,818Diluted net income (loss) per share

$
0.94


$
(3.10
)

$
1.63


$
(2.46
)Weighted-average number of common shares and dilutive potential
    common shares outstanding


53,029,943



52,953,851



53,224,753



53,064,818    4




---



##### 



AMERIGROUP
    Corporation And
    SubsidiariesCondensed Consolidated Statement of
    Stockholders Equity
     Six Months Ended June 30, 2009(Dollars
    in thousands)
    (Unaudited)
  AccumulatedAdditional


Other











TotalCommon Stock


Paid-in


Comprehensive


Retained


Treasury Stock


StockholdersShares


Amount


Capital


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


361,287



3



4,069



















4,072Compensation expense related to share-based payments










8,022



















8,022Tax benefit from exercise of stock options










918



















918Common stock redeemed for payment of employee taxes and stock
    option exercises


(34,428
)


















34,428



(912
)


(912
)Common stock repurchases


(1,002,424
)


















1,002,424



(28,555
)


(28,555
)Unrealized gain on
    available-for-sale
    securities, net of tax














296















296Net income


















86,508











86,508Balances at June 30, 2009


51,997,798


$
542


$
479,935


$
(3,726
)

$
527,861



2,244,362


$
(61,604
)

$
943,008    5




---



##### 



AMERIGROUP
    Corporation And
    SubsidiariesCondensed Consolidated Statements of Cash Flows(Dollars in thousands)
    (Unaudited)
  Six Months EndedJune 30,2009


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

$
86,508


$
(130,395
)Adjustments to reconcile net income (loss) to net cash provided
    byoperating activities:Depreciation and amortization


18,006



17,648Loss on disposal of property, equipment and software


412



259Deferred tax expense (benefit)


4,630



(6,808
)Compensation expense related to share-based payments


8,022



5,411Convertible debt non-cash interest expense


4,987



4,672Impairment of goodwill






8,808Gain on sale of contract rights


(5,810
)


Other


(201
)


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


(15,683
)


(28,821
)Prepaid expenses, provider and other receivables and other
    current assets


(35,928
)


5,220Other assets


(439
)


(2,198
)Claims payable


26,883



571Litigation settlement






234,205Accounts payable, accrued expenses and other current liabilities


(36,605
)


(31,481
)Unearned revenue


(18,161
)


18,771Other long-term liabilities


(2,583
)


(22
)Net cash provided by operating activities


34,038



95,840Cash flows from investing activities:Proceeds from sale of available-for-sale securities


13,708



93,975Purchase of available-for-sale securities


(164,351
)


(81,800
)Proceeds from redemption of held-to-maturity securities


273,125



343,325Purchase of held-to-maturity securities


(194,851
)


(339,633
)Purchase of property, equipment and software


(15,865
)


(17,514
)Proceeds from redemption of investments on deposit for licensure


38,682



39,474Purchase of investments on deposit for licensure


(42,595
)


(41,647
)Proceeds from sale of contract rights


5,810



Net cash used in investing activities


(86,337
)


(3,820
)Cash flows from financing activities:Repayment of borrowings under credit facility


(26,318
)


(26,786
)Net decrease in bank overdrafts


(2,492
)


(300
)Payment of capital lease obligations






(293
)Customer funds administered


(3,764
)


Proceeds from exercise of stock options and employee stock
    purchases


3,729



3,461Repurchase of common stock shares


(28,555
)


(19,260
)Tax benefit related to exercise of stock options


918



1,072Net cash used in financing activities


(56,482
)


(42,106
)Net (decrease) increase in cash and cash equivalents


(108,781
)


49,914Cash and cash equivalents at beginning of period


763,272



487,614Cash and cash equivalents at end of period

$
654,491


$
537,528Non-cash disclosures:Common stock redeemed for payment of employee taxes and stock
    option exercises

$
(912
)

$
(597
)Unrealized gain (loss) on available-for-sale securities, net of
    tax

$
296


$
(2,854
)    6




---



##### 



AMERIGROUP
    Corporation And
    SubsidiariesNotes to Condensed Consolidated Financial
    Statements(Dollars
    in thousands, except per share data)
    (Unaudited)
  1. Interim Financial Reporting
  Basis
    of Presentation
  14-1, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1). 14-1.
  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


Six Months EndedJune 30,


June 30,2009


2008


2009


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

$
49,599


$
(164,032
)

$
86,508


$
(130,395
)Weighted-average number of common shares outstanding


52,308,721



52,953,851



52,488,010



53,064,818Basic net income (loss) per share

$
0.95


$
(3.10
)

$
1.65


$
(2.46
)Diluted net income (loss) per share:Net income (loss)

$
49,599


$
(164,032
)

$
86,508


$
(130,395
)Weighted-average number of common shares outstanding


52,308,721



52,953,851



52,488,010



53,064,818Dilutive effect of stock options and non-vested stock awards (as
    determined by applying the treasury stock method)


721,222







736,743



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


53,029,943



52,953,851



53,224,753



53,064,818Diluted net income (loss) per share

$
0.94


$
(3.10
)

$
1.63


$
(2.46
)      8




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    3. Recent Accounting Standards
  Fair
    Value
  FAS 157-4, Determining Fair Value When the Volume and Level of Activity
    for the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly FAS 157-4), Fair Value Measurements FAS 157-4 FAS 157-4
  FAS 115-2 FAS 124-2, Recognition and Presentation of
    Other-Than-Temporary
    Impairments FAS 115-2 FAS 124-2). FAS 115-2 124-2 other-than-temporary FAS 115-2 FAS 124-2
  FAS 107-1 28-1, Interim Disclosures about Fair Value of Financial Instruments FAS 107-1 28-1). FAS 107-1 28-1 Disclosures about Fair Value of
    Financial Instruments FAS 107-1 28-1
  FSP
    APB
    14-1
  14-1,
 9




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  14-1 14-1 14-1,
  14-1
  14-1:
  Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Interest expense:Non-cash interest

$
2,493


$
2,336


$
4,987


$
4,672Cash interest


1,300



1,300



2,600



2,600Total interest expense

$
3,793


$
3,636


$
7,587


$
7,272   14-1:
  Three Months Ended


Six Months EndedJune 30, 2008


June 30, 2008As


As


Effect of


As


As


Effect ofReported


Adjusted


Change


Reported


Adjusted


ChangeCondensed Consolidated Statements of OperationsInterest expense

$
2,899


$
5,235


$
2,336


$
6,353


$
11,025


$
4,672Loss before income taxes


(175,886
)


(178,222
)


(2,336
)


(119,193
)


(123,865
)


(4,672
)Income tax (benefit) expense


(13,347
)


(14,190
)


(843
)


8,253



6,530



(1,723
)Net loss


(162,539
)


(164,032
)


(1,493
)


(127,446
)


(130,395
)


(2,949
)Basic net loss per share


(3.07
)


(3.10
)


(0.03
)


(2.40
)


(2.46
)


(0.06
)Diluted net loss per share


(3.07
)


(3.10
)


(0.03
)


(2.40
)


(2.46
)


(0.06
)   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
)  10




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  14-1:
  As of


As ofJune 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


29,883



34,870Net carrying amount of the liability component


230,117



225,130Remaining amortization period of discount


35 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
  The tm and the Hierarchy of Generally Accepted Accounting
    Principlesa replacement of FASB Statement No. 162 FASB Accounting Standards
    Codificationtm
  Subsequent Events
  4. Investments and Fair Value Measurements
           11




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  available-for-sale available-for-sale.
  available-for-sale
    Fair Value Measurements at Reporting Date UsingQuoted Prices in





SignificantActive Markets for


Significant Other


UnobservableIdentical Assets


Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Cash equivalents

$
573,437


$
573,437


$



$
Debt securities (available-for-sale)


156,773



156,773







Auction rate securities (available-for-sale)


50,796











50,796Auction rate securities (trading)


16,009











16,009Forward contract related to auction rate securities


1,804











1,804Total assets measured at fair value

$
798,819


$
730,210


$



$
68,609  12




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##### 



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


Six Months EndedJune 30,


June 30,Beginning balance

$
73,155


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


1,875



1,618Total realized gains included in earnings


429



187Settlements


(6,850
)


(6,850
)Balance at June 30, 2009

$
68,609


$
68,609   Establishing the Fair Value Option for
    Financial Assets and Liabilities
  available-for-sale held-to-maturity Accounting for Certain Investments in Debt and Equity
    Securities
  GrossGross


UnrealizedAmortized


Unrealized


Holding


FairCost


Holding Gains


Losses


ValueHeld-to-maturity
    (carried at amortized cost):Debt securities of government sponsored entities

$
24,906


$
89


$



$
24,995  13




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##### 



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


UnrealizedAmortized


Unrealized


Holding


FairCost


Holding Gains


Losses


ValueAvailable-for-sale
    securities (carried at fair value):Auction rate securities, maturing between one year and five years

$
4,000


$



$
266


$
3,734Auction rate securities, maturing in greater than ten years


51,550







4,488



47,062Corporate bonds, maturing between one year and five years


102,423



338



230



102,531Debt securities of government sponsored entities, maturing
    between one year and five years


3,910











3,910Municipal bonds, maturing between five years and ten years


23,527



9



372



23,164Municipal bonds, maturing in greater than ten years


27,633







465



27,168Total
    available-for-sale
    securities

$
213,043


$
347


$
5,821


$
207,569Held-to-maturity
    securities (carried at amortized cost):Corporate bonds, maturing within one year

$
20,015


$
64


$
150


$
19,929Corporate bonds, maturing between one year and five years


21,545



328



13



21,860Federally insured corporate bonds maturing within one year


43,315



815



4



44,126Municipal bonds, maturing between one year and five years


4,000



36







4,036Debt securities of government sponsored entities, maturing
    within one year


46,015



685







46,700Debt securities of government sponsored entities, maturing
    between one year and five years


264,441



2,656



26



267,071Total
    held-to-maturity
    securities

$
399,331


$
4,584


$
193


$
403,722     Purchase


Realized


Realized


FairAmount


Gains


Losses


ValueTrading securities (carried at fair value):Auction rate securities, maturing in greater than ten years

$
17,850


$



$
1,841


$
16,009    14




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##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  held-to-maturity
  GrossGross


UnrealizedAmortized


Unrealized


Holding


FairCost


Holding Gains


Losses


ValueCash

$
433


$



$



$
433Money market funds


18,212











18,212Certificate of deposits, maturing between one year and five years


11,150











11,150Held-to-maturity
    (carried at amortized cost):U.S. Treasury securities, maturing within one year


16,186



49







16,235U.S. Treasury securities, maturing between one year and five
    years


1,853



108







1,961U.S. Treasury securities, maturing between five years and ten
    years


588



44







632Debt securities of government sponsored entities, maturing
    within one year


927



3







930Debt securities of government sponsored entities, maturing
    between one year and five years


49,542



259



54



49,747Total

$
98,891


$
463


$
54


$
99,300   available-for-sale held-to-maturity 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

$



$







$
50,796


$
4,754



15Corporate bonds


71,193



393



26











Federally insured corporate bonds


4,103



4



1











Municipal bonds


44,930



837



16











Debt securities of government sponsored entities


28,920



80



7











Total temporarily impaired securities

$
149,146


$
1,314



50


$
50,796


$
4,754



15    15




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
   5. Market Updates
  South
    Carolina
    Nevada
    New
    Mexico
    6. Long-Term Obligations
  Credit
    Agreement
       16




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
      Convertible
    Senior Notes
  Form S-3
    and/or and/or
   17




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
        7. Share Repurchase Program
  time-to-time,
  8. Contingencies
  Legal
    Proceedings
  Purchase
    Agreement Litigation
     18




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    No. C-8-09.
        Risk
    Sharing Receivable
  no. 153-232258-08,
   19




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  Other
    Litigation
    9. Significant Income Tax Uncertainties
  qui tam
 20




---



##### 



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
 21




---



##### 



Overview
    Summary
    highlights for the periods ended June 30, 2009
    include:
  
    Membership of approximately 1,723,000 as of June 30, 2009.
    Risk membership increased 10.0%, or approximately 156,000
    members, from June 30, 2008 to June 30, 2009;
    Total revenues of $1.3 billion for the second quarter of
    2009, a 15.6% increase over the second quarter of 2008;
    Health benefits ratio (HBR) of 85.9% of premium
    revenues for the second quarter of 2009 compared to 83.0% in the
    second quarter of 2008;
    Selling, general and administrative expense
    (SG&A) ratio of 7.5% of total revenues for the
    second quarter of 2009 compared to 10.1% in the second quarter
    of 2008;
    We recorded a one-time tax benefit of $22.4 million, or
    $0.43 per diluted share, pursuant to an agreement reached in
    principle with the IRS during the three months ended
    June 30, 2009, related to the tax treatment of the
    previously recorded litigation settlement;
    Cash flow from operations was $34.0 million for the six
    months ended June 30, 2009;
    Unregulated cash and investments of $253.8 million as of
    June 30, 2009;
    We repaid approximately $26.2 million of our outstanding
    term loan during the three months ended June 30, 2009; our
    debt to total capital ratio decreased to 20.8%; and
    We repurchased approximately 745,000 shares of common stock
    for $22.2 million during the second quarter of 2009.  Revenue
    Growth
     22




---



##### 



Operating
    Costs
  Health
    benefits expenses
    Selling,
    general and administrative expenses
    Significant
    Income Tax Uncertainties
  qui tam
  Market
    Updates
  Tennessee
   23




---



##### 



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.   24




---



##### 



Results
    of Operations
    Three Months Ended


Six Months EndedJune 30,


June 30,2009


2008


2009


2008Premium revenue


99.5
%


98.3
%


99.3
%


98.1
%Investment income and other


0.5



1.7



0.7



1.9Total revenue


100.0
%


100.0
%


100.0
%


100.0
%Health
    benefits(1)


85.9
%


83.0
%


84.8
%


83.2
%Selling, general and administrative expenses


7.5
%


10.1
%


8.2
%


10.0
%Income (loss) before income taxes


3.4
%


(16.0
)%


4.1
%


(5.7
)%Net income (loss)


3.8
%


(14.7
)%


3.4
%


(6.0
)%     (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
    Six Months Ended June 30, 2009 Compared to Three and Six
    Months Ended June 30, 2008
    Three Months


Six MonthsThree Months


Six Months


Ended


EndedEnded


Ended


June 30,


June 30,June 30,


June 30,


% Change


% Change2009


2008


2009


2008


2009-2008


2009-2008Revenues:Premium

$
1,284.9


$
1,098.4


$
2,502.3


$
2,148.4



17.0
%


16.5
%Investment income and other


6.5



18.5



18.9



41.1



(64.7
)%


(54.1
)%Total revenues


1,291.4



1,116.8



2,521.2



2,189.4



15.6
%


15.2
%Expenses:Health benefits


1,103.2



911.5



2,122.5



1,786.4



21.0
%


18.8
%Selling, general and administrative


96.3



113.1



206.7



219.9



(14.9
)%


(6.0
)%Premium tax


34.6



22.1



62.7



44.1



56.5
%


42.1
%Litigation settlement






234.2







234.2



*



*Depreciation and amortization


9.7



8.9



18.0



17.6



9.1
%


2.0
%Interest


4.2



5.2



8.5



11.0



(19.2
)%


(23.2
)%Total expenses


1,248.0



1,295.0



2,418.4



2,313.3



(3.6
)%


4.5
%Income (loss) before income taxes


43.4



(178.2
)


102.8



(123.9
)


*



*Income tax (benefit) expense


(6.2
)


(14.2
)


16.3



6.5



(56.1
)%


*Net income (loss)

$
49.6


$
(164.0
)

$
86.5


$
(130.4
)


*



*Diluted net income (loss) per share

$
0.94


$
(3.10
)

$
1.63


$
(2.46
)


*



*     *
    
    Not meaningful. 25




---



##### 



Revenues
      Membership
    June 30,2009


2008Texas(1)


476,000



458,000Florida


264,000



221,000Georgia


220,000



197,000Tennessee(2)


195,000



353,000Maryland


183,000



158,000New Jersey


112,000



101,000New York


111,000



112,000Ohio


60,000



57,000Nevada


53,000



Virginia


29,000



25,000New
    Mexico(3)


20,000



District of
    Columbia(4)






34,000South
    Carolina(5)






4,000Total


1,723,000



1,720,000     (1)
    
    Included in Texas membership in 2009 are approximately 13,000
    members under an ASO contract that began June 1, 2009.(2)
    
    Included in Tennessee membership in 2008 are approximately
    166,000 members under an ASO contract. This contract terminated
    October 31, 2008.(3)
    
    The contract in New Mexico began in January 2008 with a Medicare
    Advantage product. As of June 30, 2008, there were less
    than 1,000 members. 26




---



##### 



(4)
    
    The contract with the District of Columbia terminated
    June 30, 2008.(5)
    
    The contract with South Carolina terminated March 1, 2009
    concurrent with the sale of our rights under the contract.      June 30,Product

2009


2008TANF
    (Medicaid)(1)(3)


1,194,000



1,219,000CHIP(3)


257,000



243,000Aged Blind or Disabled
    (Medicaid)(2)


205,000



206,000FamilyCare (Medicaid)


54,000



44,000Medicare Advantage


13,000



8,000Total


1,723,000



1,720,000     (1)
    
    Membership includes approximately 125,000 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.  Health
    benefits expenses
    Selling,
    general and administrative expenses
   27




---



##### 



Premium
    tax expense
    Depreciation
    and amortization expenses
    Interest
    expense
    Provision
    for income taxes
    Liquidity
    and capital resources
   28




---



##### 



Credit
    Agreement
          Convertible
    Senior Notes
  Form S-3
   29




---



##### 



and/or and/or
        Universal
    Automatic Shelf Registration
    Share
    Repurchase Program
  time-to-time,
  Cash and
    Investments
   30




---



##### 



available-for-sale available-for-sale
    available-for-sale 28-35 days Fair Value
    Measurements
 31




---



##### 



available-for-sale.
      debt-to-total
    Regulatory
    Capital and Dividend Restrictions
   32




---



##### 



Recent
    Accounting Standards
  FSP
    APB 14-1
  Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement) 14-1 14-1 14-1,
  14-1 14-1
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk   33




---



##### 



time-to-time
  Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures. Rules 13a-15(e) 15d-15(e)
  Changes in Internal Controls over Financial
    Reporting. Sarbanes-Oxley
 34




---



##### 



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  Maximum NumberTotal Number of


Shares (or Units)Average


Shares (or Units)


that May Yet BeTotal Number of


Price Paid


Purchased as Part of


Purchased UnderShares (or Units)


per Share


Publicly Announced


the Plans orPeriod

Purchased


(or Unit)


Plans or Programs(1)


Programs(1)April 1  April 30, 2009





$








3,579,152May 1  May 31,
    2009(2)


(601,214
)


30.13



(589,987
)


2,989,165June 1  June 30, 2009


(154,616
)


28.48



(154,616
)


2,834,549Total


(755,830
)

$
29.79



(744,603
)


2,834,549     (1)
    
    Share repurchased during the six months ended June 30, 2009
    were purchased as part of the Companys existing authorized
    share repurchase program.(2)
    
    Our 2009 Equity Plan allows, upon approval by the plan
    administrator, stock option recipients to deliver shares of
    unrestricted Company common stock held by the participant as
    payment of the exercise price and applicable withholding taxes
    upon the exercise of stock options or vesting of restricted
    stock. During May 2009, certain employees elected to tender
    11,227 shares to the Company in payment of the exercise
    price for certain stock option exercises.  Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Total Votes for


Total Votes WithheldEach Director


for Each DirectorThomas E. Capps


48,744,128



845,147Emerson U. Fullwood


49,339,713



249,562William J. McBride


46,883,929



2,705,346    35




---



##### 



Total Votes for


Total Votes


Total Votesthe Plan


Against the Plan


Abstained2009 Equity Incentive Plan


38,278,446



8,736,490



167,755   Item 5.
    Other
    Information    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). 36




---



##### 



ExhibitNumber

Description4
.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).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 November 12, 2008).31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 5, 2009.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 5, 2009.32


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of
    Sarbanes-Oxley
    Act of 2002, dated August 5, 2009.  37




---



##### 



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.
  Corporation
  By:
    /s/  James
    G. Carlson   Chairman, Chief Executive
 Officer and President
    By:
    /s/  James
    W. Truess   Chief Financial Officer and
 Executive Vice President
   38




---



##### 



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).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 November 12, 2008).31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 5, 2009.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 5, 2009.32


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of
    Sarbanes-Oxley
    Act of 2002, dated August 5, 2009.  39