##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-Q


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|   |  | For the quarterly period ended June 30, 2005                                                
|  
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                             

Commission File Number 001-31574





AMERIGROUP Corporation


(Exact name of registrants 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


þ o












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AMERIGROUP Corporation
And Subsidiaries


Table Of
Contents


|                                  |  |                                                                                                                   |  |  |    | 
|--------------------------------- |  | ----------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|Part I.
    Financial Information
|Item 1.                           |  | Financial Statements                                                                                              |  |  |    | 
|                                  |  | Condensed Consolidated Balance Sheets as of
    June 30, 2005 and December 31, 2004                               |  |  | 3  | 
|                                  |  | Condensed Consolidated Income Statements
    for the three and six month periods ended June 30, 2005 and
    2004 |  |  | 4  | 
|                                  |  | Condensed Consolidated Statements of Cash
    Flows for the six month periods ended June 30, 2005 and
    2004    |  |  | 5  | 
|                                  |  | Notes to Condensed Consolidated Financial
    Statements                                                          |  |  | 6  | 
|Item 2.                           |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                         |  |  | 13 | 
|Item 3.                           |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                    |  |  | 21 | 
|Item 4.                           |  | Controls and Procedures                                                                                           |  |  | 21 | 
|Part II.
    Other Information   
|Item 1.                           |  | Legal Proceedings                                                                                                 |  |  | 21 | 
|Item 2.                           |  | Unregistered Sales of Equity Securities and
    Use of Proceeds                                                   |  |  | 22 | 
|Item 3.                           |  | Defaults Upon Senior Securities                                                                                   |  |  | 22 | 
|Item 4.                           |  | Submission of Matters to a Vote of Security
    Holders                                                           |  |  | 22 | 
|Item 5.                           |  | Other Information                                                                                                 |  |  | 23 | 
|Item 6.                           |  | Exhibits                                                                                                          |  |  | 23 | 
|EX-10.6.9                        
|EX-10.6.10                       
|EX-31.1                          
|EX-31.2                          
|EX-32                            



2



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##### Table of Contents






Part I. Financial
Information







|        |                     
|------- | --------------------
|Item 1. | Financial Statements

AMERIGROUP Corporation
And Subsidiaries





Condensed Consolidated
Balance Sheets


|                                                      |                                                                                                                                                                                 |                            |         |         |              |   |         |         |         | 
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------- | ------------ | - | ------- | ------- | ------- | 
|                                                      |                                                                                                                                                                                 | June 30,                   |         |         | December 31, |  
|                                                      |                                                                                                                                                                                 | 2005                       |         |         | 2004         |  
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                      |                                                                                                                                                                                 | (Dollars in thousands)     |        
|ASSETS                                               
|Current assets:                                       |                                                                                                                                                                                 |                            |         |         |              |   |         |        
|                                                      | Cash and cash equivalents                                                                                                                                                       |                            | $       | 189,389 |              |   | $       | 227,130 |        
|                                                      | Short-term investments                                                                                                                                                          |                            |         | 85,986  |              |   |         | 176,364 |        
|                                                      | Premium receivables                                                                                                                                                             |                            |         | 70,376  |              |   |         | 44,081  |        
|                                                      | Deferred income taxes                                                                                                                                                           |                            |         | 8,869   |              |   |         | 11,019  |        
|                                                      | Prepaid expenses and other current assets                                                                                                                                       |                            |         | 23,279  |              |   |         | 18,737  |        
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                      |                                                                                                                                                                                 | Total current assets       |         |         | 377,899      |   |         |         | 477,331 | 
|Long-term investments                                 |                                                                                                                                                                                 |                            | 204,163 |         |              |   | 208,565 |        
|Investments on deposit for licensure                  |                                                                                                                                                                                 |                            | 55,030  |         |              |   | 38,365  |        
|Property and equipment, net                           |                                                                                                                                                                                 |                            | 35,566  |         |              |   | 34,030  |        
|Software, net                                         |                                                                                                                                                                                 |                            | 21,121  |         |              |   | 16,268  |        
|Other long-term assets                                |                                                                                                                                                                                 |                            | 10,135  |         |              |   | 4,909   |        
|Goodwill and other intangible assets, net             |                                                                                                                                                                                 |                            | 254,561 |         |              |   | 140,382 |        
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                      |                                                                                                                                                                                 | $                          | 958,475 |         |              | $ | 919,850 |        
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                     
|LIABILITIES AND STOCKHOLDERS EQUITY                 
|Current liabilities:                                  |                                                                                                                                                                                 |                            |         |         |              |   |         |        
|                                                      | Claims payable                                                                                                                                                                  |                            | $       | 261,147 |              |   | $       | 241,253 |        
|                                                      | Accounts payable                                                                                                                                                                |                            |         | 4,078   |              |   |         | 4,826   |        
|                                                      | Unearned revenue                                                                                                                                                                |                            |         | 6,899   |              |   |         | 34,228  |        
|                                                      | Accrued payroll and related liabilities                                                                                                                                         |                            |         | 18,301  |              |   |         | 19,833  |        
|                                                      | Accrued expenses and other current liabilities                                                                                                                                  |                            |         | 20,035  |              |   |         | 33,841  |        
|                                                      | Current portion of capital lease obligations                                                                                                                                    |                            |         | 2,346   |              |   |         | 3,168   |        
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                      |                                                                                                                                                                                 | Total current liabilities  |         |         | 312,806      |   |         |         | 337,149 | 
|Capital lease obligations, less current portion       |                                                                                                                                                                                 |                            | 1,941   |         |              |   | 2,878   |        
|Deferred income taxes and other long-term liabilities |                                                                                                                                                                                 |                            | 16,485  |         |              |   | 11,111  |        
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                      |                                                                                                                                                                                 | Total liabilities          |         |         | 331,232      |   |         |         | 351,138 | 
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|Stockholders equity:                                 |                                                                                                                                                                                 |                            |         |         |              |   |         |        
|                                                      | Common stock, $0.01 par value. Authorized
    100,000,000 shares; issued and outstanding 51,336,576 and
    50,529,724 at June 30, 2005 and December 31, 2004,
    respectively |                            |         | 513     |              |   |         | 505     |        
|                                                      | Additional paid-in capital                                                                                                                                                      |                            |         | 368,138 |              |   |         | 352,417 |        
|                                                      | Retained earnings                                                                                                                                                               |                            |         | 258,592 |              |   |         | 215,790 |        
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                      |                                                                                                                                                                                 | Total stockholders equity |         |         | 627,243      |   |         |         | 568,712 | 
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  
|                                                      |                                                                                                                                                                                 | $                          | 958,475 |         |              | $ | 919,850 |        
|                                                      |                                                                                                                                                                                 |                            |         |         |              |  



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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries





Condensed Consolidated
Income Statements


|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |           |            |  |        |         |            | 
|--------------------- | ----------------------------------- | --------------------------------------------------------------------------------------------- | ------ | ------- | ---------------- |  | ------ | ------- | ---------- |  | ------ | --------- | ---------- |  | ------ | ------- | ---------- | 
|                      |                                     | Three Months Ended                                                                            |        |         | Six Months Ended | 
|                      |                                     | June 30,                                                                                      |        |         | June 30,         | 
|                      |                                     |                                                                                               |        |         |                  | 
|                      |                                     | 2005                                                                                          |        |         | 2004             |  |        | 2005    |            |  | 2004   |          
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | (Dollars in thousands, except for per share data)                                             |       
|Revenues:             |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |           |            |  |        |        
|                      | Premium                             |                                                                                               | $      | 560,731 |                  |  | $      | 435,918 |            |  | $      | 1,114,619 |            |  | $      | 858,253 |           
|                      | Investment income and other         |                                                                                               |        | 3,991   |                  |  |        | 2,217   |            |  |        | 7,615     |            |  |        | 4,177   |           
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | Total revenues                                                                                |        |         | 564,722          |  |        |         | 438,135    |  |        |           | 1,122,234  |  |        |         | 862,430    | 
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|Expenses:             |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |           |            |  |        |        
|                      | Health benefits                     |                                                                                               |        | 463,071 |                  |  |        | 354,415 |            |  |        | 917,475   |            |  |        | 696,662 |           
|                      | Selling, general and administrative |                                                                                               |        | 57,745  |                  |  |        | 43,728  |            |  |        | 119,786   |            |  |        | 89,215  |           
|                      | Depreciation and amortization       |                                                                                               |        | 6,661   |                  |  |        | 5,266   |            |  |        | 13,752    |            |  |        | 10,890  |           
|                      | Interest                            |                                                                                               |        | 160     |                  |  |        | 194     |            |  |        | 320       |            |  |        | 375     |           
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | Total expenses                                                                                |        |         | 527,637          |  |        |         | 403,603    |  |        |           | 1,051,333  |  |        |         | 797,142    | 
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | Income before income taxes                                                                    |        |         | 37,085           |  |        |         | 34,532     |  |        |           | 70,901     |  |        |         | 65,288     | 
|Income tax expense    |                                     |                                                                                               | 14,537 |         |                  |  | 13,686 |         |            |  | 27,910 |           |            |  | 26,004 |        
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | Net income                                                                                    |        | $       | 22,548           |  |        | $       | 20,846     |  |        | $         | 42,991     |  |        | $       | 39,284     | 
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|Net income per share: |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |           |            |  |        |        
|                      |                                     | Basic net income per share                                                                    |        | $       | 0.44             |  |        | $       | 0.42       |  |        | $         | 0.84       |  |        | $       | 0.80       | 
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | Weighted average number of common shares outstanding                                          |        |         | 51,236,478       |  |        |         | 49,600,824 |  |        |           | 50,988,244 |  |        |         | 49,362,826 | 
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | Diluted net income per share                                                                  |        | $       | 0.43             |  |        | $       | 0.40       |  |        | $         | 0.81       |  |        | $       | 0.76       | 
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          
|                      |                                     | Weighted average number of common shares and dilutive potential
    common shares outstanding |        |         | 53,053,949       |  |        |         | 51,582,960 |  |        |           | 53,006,836 |  |        |         | 51,420,945 | 
|                      |                                     |                                                                                               |        |         |                  |  |        |         |            |  |        |          



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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries





Condensed Consolidated
Statements Of Cash Flows


|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |         |         |            |        |         |         |  
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------- | --------------------------------------------------- | ------ | ------- | ------- | ---------- | ------ | ------- | ------- | -
|                                                   |                                                                                                 | Six Months Ended                                                                          |                                                  
|                                                   |                                                                                                 | June 30,                                                                                  |                                                  
|                                                   |                                                                                                 |                                                                                           |                                                  
|                                                   |                                                                                                 | 2005                                                                                      |                                                   |                                                     | 2004   |        
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|                                                   |                                                                                                 | (Dollars in thousands)                                                                    |                                                  
|Cash flows from operating activities:              |                                                                                                 |                                                                                           |                                                   |                                                     |        |         |         |           
|                                                   | Net income                                                                                      |                                                                                           | $                                                 | 42,991                                              |        |         | $       | 39,284     |       
|                                                   | Adjustments to reconcile net income to net cash (used in)
    provided by operating activities: |                                                                                           |                                                   |                                                     |        |         |         |            |       
|                                                   |                                                                                                 | Depreciation and amortization                                                             |                                                   |                                                     | 13,752 |         |         |            | 10,890 |        
|                                                   |                                                                                                 | Loss on disposal or abandonment of property, equipment and
    software                   |                                                   |                                                     |       |         |         |            | 945    |        
|                                                   |                                                                                                 | Deferred tax expense                                                                      |                                                   |                                                     | 2,334  |         |         |            | 1,103  |        
|                                                   |                                                                                                 | Amortization of deferred compensation                                                     |                                                   |                                                     |       |         |         |            | 57     |        
|                                                   |                                                                                                 | Tax benefit related to exercise of stock options                                          |                                                   |                                                     | 7,405  |         |         |            | 3,385  |        
|                                                   |                                                                                                 | Changes in assets and liabilities increasing
    (decreasing) cash flows from operations: |                                                   |                                                     |        |         |         |            |        |        
|                                                   |                                                                                                 |                                                                                           | Premium receivables                               |                                                     |        | (20,468 | )       |            |        | 440     |        
|                                                   |                                                                                                 |                                                                                           | Prepaid expenses and other current assets         |                                                     |        | (1,406  | )       |            |        | 457     |        
|                                                   |                                                                                                 |                                                                                           | Other assets                                      |                                                     |        | (3,815  | )       |            |        | (974    | )      
|                                                   |                                                                                                 |                                                                                           | Claims payable                                    |                                                     |        | (7,530  | )       |            |        | (6,614  | )      
|                                                   |                                                                                                 |                                                                                           | Accounts payable, accrued expenses and other, net |                                                     |        | (19,285 | )       |            |        | (5,469  | )      
|                                                   |                                                                                                 |                                                                                           | Unearned revenue                                  |                                                     |        | (27,422 | )       |            |        | (25,506 | )      
|                                                   |                                                                                                 |                                                                                           | Other long-term liabilities                       |                                                     |        | (742    | )       |            |        | 787     |        
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|                                                   |                                                                                                 |                                                                                           |                                                   | Net cash (used in) provided by operating activities |        |         | (14,186 | )          |        |         | 18,785  |  
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|Cash flows from investing activities:              |                                                                                                 |                                                                                           |                                                   |                                                     |        |         |         |           
|                                                   | Proceeds from sales of available-for-sale securities                                            |                                                                                           |                                                   | 811,475                                             |        |         |         | 2,300,498  |       
|                                                   | Purchase of available-for-sale investments                                                      |                                                                                           |                                                   | (712,661                                            | )      |         |         | (2,225,430 | )     
|                                                   | Proceeds from redemption of held-to-maturity securities                                         |                                                                                           |                                                   | 65,100                                              |        |         |         | 77,631     |       
|                                                   | Purchase of held-to-maturity investments                                                        |                                                                                           |                                                   | (69,323                                             | )      |         |         | (162,099   | )     
|                                                   | Purchase of property and equipment and software                                                 |                                                                                           |                                                   | (11,301                                             | )      |         |         | (10,473    | )     
|                                                   | Proceeds from redemption of investments on deposit for licensure                                |                                                                                           |                                                   | 17,231                                              |        |         |         | 35,225     |       
|                                                   | Purchase of investments on deposit for licensure                                                |                                                                                           |                                                   | (25,869                                             | )      |         |         | (37,345    | )     
|                                                   | Acquisition, net of cash acquired                                                               |                                                                                           |                                                   | (103,645                                            | )      |         |         |           |       
|                                                   | Purchase price adjustment received                                                              |                                                                                           |                                                   |                                                    |        |         |         | 48         |       
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|                                                   |                                                                                                 |                                                                                           |                                                   | Net cash used in investing activities               |        |         | (28,993 | )          |        |         | (21,945 | )
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|Cash flows from financing activities:              |                                                                                                 |                                                                                           |                                                   |                                                     |        |         |         |           
|                                                   | Net increase (decrease) in bank overdrafts                                                      |                                                                                           |                                                   | 593                                                 |        |         |         | (5,315     | )     
|                                                   | Payment of capital lease obligations                                                            |                                                                                           |                                                   | (1,853                                              | )      |         |         | (2,636     | )     
|                                                   | Payment of debt issuance costs                                                                  |                                                                                           |                                                   | (1,626                                              | )      |         |         |           |       
|                                                   | Proceeds from exercise of common stock options and employee
    stock purchases                 |                                                                                           |                                                   | 8,324                                               |        |         |         | 6,538      |       
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|                                                   |                                                                                                 |                                                                                           |                                                   | Net cash provided by (used in) financing activities |        |         | 5,438   |            |        |         | (1,413  | )
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|Net decrease in cash and cash equivalents          |                                                                                                 |                                                                                           | (37,741                                           | )                                                   |        |         | (4,573  | )         
|Cash and cash equivalents at beginning of period   |                                                                                                 |                                                                                           | 227,130                                           |                                                     |        |         | 84,030  |           
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|Cash and cash equivalents at end of period         |                                                                                                 | $                                                                                         | 189,389                                           |                                                     |        | $       | 79,457  |           
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|Supplemental disclosures of cash flow information: |                                                                                                 |                                                                                           |                                                   |                                                     |        |         |         |           
|                                                   | Cash paid for interest                                                                          |                                                                                           | $                                                 | 364                                                 |        |         | $       | 285        |       
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        
|                                                   | Cash paid for income taxes                                                                      |                                                                                           | $                                                 | 21,909                                              |        |         | $       | 21,334     |       
|                                                   |                                                                                                 |                                                                                           |                                                   |                                                     |        |        



|                                           |                     |   |         |         | 
|------------------------------------------ | ------------------- | - | ------- | ------- | 
|Assets acquired, including cash of $27,755 |                     | $ | 168,484 |        
|Liabilities assumed                        |                     |   | 37,084  |        
|                                           |                     |   |        
|                                           | Net assets acquired |   | $       | 131,400 | 
|                                           |                     |   |        



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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries





Notes to Condensed
Consolidated Financial Statements


(Dollars in thousands, except per share data)










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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries


Notes to Condensed
Consolidated Financial
Statements  (Continued)




|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |            |  |  |   |            | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------ | - | ---------- | ---------------- |  | - | ---------- |  |  | ---- | ---------- |  |  | - | ---------- | 
|                              |                                                                                               | Three Months Ended |   |            | Six Months Ended | 
|                              |                                                                                               | June 30,           |   |            | June 30,         | 
|                              |                                                                                               |                    |   |            |                  | 
|                              |                                                                                               | 2005               |   |            | 2004             |  |   | 2005       |  |  | 2004 |           
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           
|Basic net income per share:   |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |            |  |  |   |           
|                              | Net income                                                                                    |                    | $ | 22,548     |                  |  | $ | 20,846     |  |  | $    | 42,991     |  |  | $ | 39,284     | 
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           
|                              | Weighted average number of common shares outstanding                                          |                    |   | 51,236,478 |                  |  |   | 49,600,824 |  |  |      | 50,988,244 |  |  |   | 49,362,826 | 
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           
|                              | Basic net income per share                                                                    |                    | $ | 0.44       |                  |  | $ | 0.42       |  |  | $    | 0.84       |  |  | $ | 0.80       | 
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           
|Diluted net income per share: |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |            |  |  |   |           
|                              | Net income                                                                                    |                    | $ | 22,548     |                  |  | $ | 20,846     |  |  | $    | 42,991     |  |  | $ | 39,284     | 
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           
|                              | Weighted average number of common shares outstanding                                          |                    |   | 51,236,478 |                  |  |   | 49,600,824 |  |  |      | 50,988,244 |  |  |   | 49,362,826 | 
|                              | Dilutive effect of stock options (as determined by applying the
    treasury stock method)    |                    |   | 1,817,471  |                  |  |   | 1,982,136  |  |  |      | 2,018,592  |  |  |   | 2,058,119  | 
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           
|                              | Weighted average number of common shares and dilutive potential
    common shares outstanding |                    |   | 53,053,949 |                  |  |   | 51,582,960 |  |  |      | 53,006,836 |  |  |   | 51,420,945 | 
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           
|                              | Diluted net income per share                                                                  |                    | $ | 0.43       |                  |  | $ | 0.40       |  |  | $    | 0.81       |  |  | $ | 0.76       | 
|                              |                                                                                               |                    |   |            |                  |  |   |            |  |  |      |           

Accounting for Stock-Based
Compensation Accounting for Stock Issued to Employees Accounting for Stock-Based
Compensation  Transition and Disclosure


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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries


Notes to Condensed
Consolidated Financial
Statements  (Continued)




|                              |                                                                                                                                                     |                    |   |        |                  |  |   |        |  |  |      |        |  |  |   |        | 
|----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | - | ------ | ---------------- |  | - | ------ |  |  | ---- | ------ |  |  | - | ------ | 
|                              |                                                                                                                                                     | Three Months Ended |   |        | Six Months Ended | 
|                              |                                                                                                                                                     | June 30,           |   |        | June 30,         | 
|                              |                                                                                                                                                     |                    |   |        |                  | 
|                              |                                                                                                                                                     | 2005               |   |        | 2004             |  |   | 2005   |  |  | 2004 |       
|                              |                                                                                                                                                     |                    |   |        |                  |  |   |        |  |  |      |       
|Net income:                   |                                                                                                                                                     |                    |   |        |                  |  |   |        |  |  |      |        |  |  |   |       
|                              | Reported net income                                                                                                                                 |                    | $ | 22,548 |                  |  | $ | 20,846 |  |  | $    | 42,991 |  |  | $ | 39,284 | 
|                              | Deduct: Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |                    |   | 3,373  |                  |  |   | 2,304  |  |  |      | 6,147  |  |  |   | 4,408  | 
|                              |                                                                                                                                                     |                    |   |        |                  |  |   |        |  |  |      |       
|                              | Proforma net income                                                                                                                                 |                    | $ | 19,175 |                  |  | $ | 18,542 |  |  | $    | 36,844 |  |  | $ | 34,876 | 
|                              |                                                                                                                                                     |                    |   |        |                  |  |   |        |  |  |      |       
|Basic net income per share:   |                                                                                                                                                     |                    |   |        |                  |  |   |        |  |  |      |        |  |  |   |       
|                              | Reported basic net income per share                                                                                                                 |                    | $ | 0.44   |                  |  | $ | 0.42   |  |  | $    | 0.84   |  |  | $ | 0.80   | 
|                              | Proforma basic net income per share                                                                                                                 |                    |   | 0.37   |                  |  |   | 0.37   |  |  |      | 0.72   |  |  |   | 0.71   | 
|Diluted net income per share: |                                                                                                                                                     |                    |   |        |                  |  |   |        |  |  |      |        |  |  |   |       
|                              | Reported diluted net income per share                                                                                                               |                    | $ | 0.43   |                  |  | $ | 0.40   |  |  | $    | 0.81   |  |  | $ | 0.76   | 
|                              | Proforma diluted net income per share                                                                                                               |                    |   | 0.36   |                  |  |   | 0.36   |  |  |      | 0.70   |  |  |   | 0.69   | 











8



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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries


Notes to Condensed
Consolidated Financial
Statements  (Continued)






|                                     |                           |   |         |         | 
|------------------------------------ | ------------------------- | - | ------- | ------- | 
|Cash and cash equivalents            |                           | $ | 27,755  |        
|Investments on deposit for licensure |                           |   | 8,027   |        
|Goodwill and other intangible assets |                           |   | 118,779 |        
|Property and equipment               |                           |   | 3,941   |        
|Other assets                         |                           |   | 9,982   |        
|                                     |                           |   |        
|                                     | Total assets acquired     |   |         | 168,484 | 
|                                     |                           |   |        
|Claims payable                       |                           |   | 27,424  |        
|Other liabilities                    |                           |   | 9,660   |        
|                                     |                           |   |        
|                                     | Total liabilities assumed |   |         | 37,084  | 
|                                     |                           |   |        
|                                     | Net assets acquired       |   | $       | 131,400 | 
|                                     |                           |   |        



|                                       |  |   |        |              |  |  |             | 
|-------------------------------------- |  | - | ------ | ------------ |  |  | ----------- | 
|                                       |  |   |        | Amortization | 
|                                       |  |   |        | period       | 
|                                       |  |   |        |              | 
|Membership rights and provider network |  | $ | 12,900 |              |  |  | 10 years    | 
|Non-compete agreement and trademarks   |  |   | 1,080  |              |  |  | 1 - 3 years | 
|                                       |  |   |        |              |  | 
|                                       |  | $ | 13,980 |              |  |  |             | 
|                                       |  |   |        |              |  | 



|                                             |  |   |           | 
|-------------------------------------------- |  | - | --------- | 
|Premium revenue                              |  | $ | 2,008,319 | 
|Investment income and other                  |  |   | 9,030     | 
|                                             |  |   |          
|Total revenues                               |  |   | 2,017,349 | 
|                                             |  |   |          
|Health benefits expenses                     |  |   | 1,608,656 | 
|Selling, general and administrative expenses |  |   | 229,812   | 
|Depreciation and amortization expenses       |  |   | 28,734    | 
|Interest expense                             |  |   | 731       | 
|                                             |  |   |          
|Income before income taxes                   |  |   | 149,416   | 
|Provision for income taxes                   |  |   | 59,093    | 
|                                             |  |   |          
|Net income                                   |  | $ | 90,323    | 
|                                             |  |   |          



9



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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries


Notes to Condensed
Consolidated Financial
Statements  (Continued)










10



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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries


Notes to Condensed
Consolidated Financial
Statements  (Continued)










Shared-Based Payment, Statement of Cash Flows.








| |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. A modified prospective method in which
    compensation cost is recognized beginning with the effective
    date (a) based on the requirements of
    SFAS No. 123(R) for all share-based payments granted
    after the effective date and (b) based on the requirements
    of SFAS No. 123 for all awards granted to employees
    prior to the effective date of SFAS No. 123(R) that
    remain unvested on the effective date.
|
| | 2. A modified retrospective method which
    includes the requirements of the modified prospective method
    described above, but also permits entities to restate based on
    the amounts previously recognized under SFAS No. 123
    for purposes of proforma disclosures.                                                                                                                                                        



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##### Table of Contents



AMERIGROUP Corporation
And Subsidiaries


Notes to Condensed
Consolidated Financial
Statements  (Continued)






|                                                      |                            |                    |        |        |                  |   |        |        |  |   |        |        |  |   |        |        | 
|----------------------------------------------------- | -------------------------- | ------------------ | ------ | ------ | ---------------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                                                      |                            | Three Months Ended |        |        | Six Months Ended |  
|                                                      |                            | June 30,           |        |        | June 30,         |  
|                                                      |                            |                    |        |        |                  |  
|                                                      |                            | 2005               |        |        | 2004             |   |        | 2005   |  |   | 2004   |       
|                                                      |                            |                    |        |        |                  |   |        |        |  |   |        |       
|Net income                                            |                            | $                  | 22,548 |        |                  | $ | 20,846 |        |  | $ | 42,991 |        |  | $ | 39,284 |       
|Changes in unrealized loss on investments, net of tax |                            |                    | (123   | )      |                  |   |       |        |  |   | (189   | )      |  |   |       |       
|                                                      |                            |                    |        |        |                  |   |        |        |  |   |        |       
|                                                      | Total comprehensive income |                    | $      | 22,425 |                  |   | $      | 20,846 |  |   | $      | 42,802 |  |   | $      | 39,284 | 
|                                                      |                            |                    |        |        |                  |   |        |        |  |   |        |       





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Item 2.     Managements
Discussion and Analysis of Financial Condition and Results of
Operations


Forward-looking Statements








| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | national, state and local economic conditions, including their
    effect on the rate increase process, timing of payments, and the
    availability and cost of labor, utilities and materials;                                                        
|
| |  | the effect of government regulations and changes in regulations
    governing the healthcare industry, including our compliance with
    such regulations and their effect on certain of our unit costs
    and our ability to manage our medical costs;
|
| |  | changes in Medicaid payment levels and methodologies and the
    application of such methodologies by the Federal and state
    governments;                                                                                                            
|
| |  | 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; and                                                                                                                                                                                                                                
|
| |  | terrorism.                                                                                                                                                                                                                                              



Overview




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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Organic growth  Our premium revenues for the second
    quarter of 2005 from this source, increased 15.7% over the same
    period in 2004 from membership increases in existing service
    areas and new markets and premium rate increases received after
    June 30, 2004 to date.                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Growth through acquisitions  Effective
    January 1, 2005, we completed our stock acquisition of
    CarePlus in New York City, New York, pursuant to the terms of
    the merger agreement. At the date of the acquisition, CarePlus
    served approximately 115,000 members covered by New York
    States Medicaid, Child Health Plus and Family Health Plus
    programs. CarePlus service areas include New York City
    (Brooklyn, Manhattan, Queens and Staten Island) and Putnam
    County, New York. CarePlus accounted for 45.0% of the premium
    revenue increase in the second quarter of 2005 over the second
    quarter of 2004.













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15



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##### Table of Contents





|                                                      |  |          |           |   |      |  |         | 
|----------------------------------------------------- |  | -------- | --------- | - | ---- |  | ------- | 
|                                                      |  | June 30, |          
|                                                      |  |          |          
|                                                      |  | 2005     |           |   | 2004 | 
|                                                      |  |          |           |   |      | 
|Texas                                                 |  |          | 401,000   |   |      |  | 356,000 | 
|Florida                                               |  |          | 218,000   |   |      |  | 240,000 | 
|Maryland                                              |  |          | 134,000   |   |      |  | 127,000 | 
|New York                                              |  |          | 125,000   |   |      |  |        | 
|New Jersey                                            |  |          | 109,000   |   |      |  | 106,000 | 
|District of Columbia                                  |  |          | 41,000    |   |      |  | 38,000  | 
|Illinois                                              |  |          | 42,000    |   |      |  | 35,000  | 
|                                                      |  |          |           |   |      | 
|Total                                                 |  |          | 1,070,000 |   |      |  | 902,000 | 
|                                                      |  |          |           |   |      | 
|Percentage growth from June 30, 2004 to June 30, 2005 |  |          | 18.6      | % |      |  |         | 



|                            |  |          |           |  |      |  |         | 
|--------------------------- |  | -------- | --------- |  | ---- |  | ------- | 
|                            |  | June 30, |          
|                            |  |          |          
|Product                     |  | 2005     |           |  | 2004 | 
|                            |  |          |           |  |      | 
|AMERICAID (Medicaid  TANF) |  |          | 753,000   |  |      |  | 616,000 | 
|AMERIKIDS (SCHIP)           |  |          | 194,000   |  |      |  | 195,000 | 
|AMERIPLUS (Medicaid  SSI)  |  |          | 84,000    |  |      |  | 76,000  | 
|AMERIFAM (FamilyCare)       |  |          | 39,000    |  |      |  | 15,000  | 
|                            |  |          |           |  |      | 
|Total                       |  |          | 1,070,000 |  |      |  | 902,000 | 
|                            |  |          |           |  |      | 





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Results of Operations




|                                             |  |                    |       |   |                  |  |       |      |  |  |       |   |  |  |       |  
|-------------------------------------------- |  | ------------------ | ----- | - | ---------------- |  | ----- | ---- |  |  | ----- | - |  |  | ----- | -
|                                             |  | Three Months Ended |       |   | Six Months Ended | 
|                                             |  | June 30,           |       |   | June 30,         | 
|                                             |  |                    |       |   |                  | 
|                                             |  | 2005               |       |   | 2004             |  |       | 2005 |  |  | 2004  |  
|                                             |  |                    |       |   |                  |  |       |      |  |  |       |  
|Premium revenue                              |  |                    | 99.3  | % |                  |  | 99.5  | %    |  |  | 99.3  | % |  |  | 99.5  | %
|Investment income and other                  |  |                    | 0.7   |   |                  |  | 0.5   |      |  |  | 0.7   |   |  |  | 0.5   |  
|                                             |  |                    |       |   |                  |  |       |      |  |  |       |  
|Total revenues                               |  |                    | 100.0 |   |                  |  | 100.0 |      |  |  | 100.0 |   |  |  | 100.0 |  
|                                             |  |                    |       |   |                  |  |       |      |  |  |       |  
|Health benefits(1)                           |  |                    | 82.6  | % |                  |  | 81.3  | %    |  |  | 82.3  | % |  |  | 81.2  | %
|Selling, general and administrative expenses |  |                    | 10.2  | % |                  |  | 10.0  | %    |  |  | 10.7  | % |  |  | 10.3  | %
|Income before income taxes                   |  |                    | 6.6   | % |                  |  | 7.9   | %    |  |  | 6.3   | % |  |  | 7.6   | %
|Net income                                   |  |                    | 4.0   | % |                  |  | 4.8   | %    |  |  | 3.8   | % |  |  | 4.6   | %






|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 Month Periods Ended June 30, 2005 Compared
to Three and Six Month Periods Ended June 30, 2004




| |         
| | --------
| | Revenues







| |                
| | ---------------
| | Health benefits





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| |   |                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Influenza-like illnesses, which negatively impacted health
    benefits by $4.9 million, or 0.9 percent of premium
    revenue, and increased medical utilization of $0.8 million,
    or 0.1 percent of premium revenue, in Fort Worth where
    we absorbed additional members who did not experience the more
    favorable outcomes that we typically experience;
|
| |  | Higher costs in New Jersey and Florida, which negatively
    impacted health benefits expense by $1.7 million, or
    0.3 percent of premium revenue; and                                                                                                                                                                                                            
|
| |  | A favorable 1.0 percent impact of integrating New York into
    the consolidated health benefits ratio.                                                                                                                                                                                                                                                              





| |                                             
| | --------------------------------------------
| | Selling, general and administrative expenses







| |   |                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An increase in premium tax related to the State of Maryland that
    began in April 2005 (0.4%);                                                                                                                                                                                                                                  
|
| |  | An increase in legal costs related to the Tyson litigation
    (0.3%);                                                                                                                                                                                                                                                            
|
| |  | An increase in other expenses as a result of the reversal in the
    prior year of an estimated state contractual assessment that was
    finalized (0.2%); and                                                                                                                                                                   
|
| |  | A decrease in salaries and benefits as a percentage of revenues
    that resulted from the reversal of an accrual for the first
    quarter and the lack of an accrual for the second quarter for
    earnings-based incentive compensation plans that represented a
    decrease in expense of approximately $7.1 million (0.7%).





| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | An increase in premium tax related to the State of New Jersey
    that began in July 2004 and the State of Maryland that began in
    April 2005 (0.3%);       
|
| |  | An increase in legal costs related to the Tyson litigation
    (0.1%);                                                                                         
|
| |  | An increase in expense resulting from the experience rebate
    calculation in our Texas market (0.1%);                                                        
|
| |  | An increase in other expenses as a result of the reversal in the
    prior year of an estimated state contractual assessment that was
    finalized (0.1%); and

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| |   |                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A decrease in salaries and benefits as a percentage of revenues
    that resulted from the lack of an accrual year to date in 2005
    for earnings-based incentive compensation plans that represented
    a decrease in expense of approximately $7.1 million (0.2%).



| |                 
| | ----------------
| | Interest expense





| |                           
| | --------------------------
| | Provision for income taxes





| |                                
| | -------------------------------
| | Liquidity and capital resources











19



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##### Table of Contents













| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in net income of $3.7 million; and                                                                                                                                                           
|
| |  | an increase in the tax benefit related to the exercise of stock
    options of $4.0 million as a result of increased option
    exercises with increased appreciation compared to the exercise
    price.





| |   |                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a decrease in the change in premium receivables of
    $20.9 million primarily due to the timing of payment for
    our new market, New York, where premium is billed by our New
    York subsidiary and collected approximately four weeks later;                                                                           
|
| |  | a decrease in the change in unearned revenue of
    $1.9 million due to the timing of premium receipts;                                                                                                                                                                                                                      
|
| |  | a decrease in the change in claims payable of $0.9 million
    primarily due to increased claims payments that resulted from
    claim systems improvements implemented in the first quarter of
    2005; and                                                                                                                
|
| |  | a decrease in the change in accounts payable, accrued expenses
    and other liabilities of $13.8 million primarily as a
    result of the decrease in the contingent liability accrued for
    the Maryland market as well as the payment of 2004 incentive
    compensation in 2005, with no corresponding accrual in 2005.









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Regulatory Capital and Dividend Restrictions







Item 3.     Quantitative and
Qualitative Disclosures About Market Risk







Item 4.     Controls and
Procedures









Part II. Other
Information





Item 1.     Legal
Proceedings




21



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Item 2.     Unregistered
Sales of Equity Securities and Use of Proceeds







Item 3.     Defaults Upon
Senior Securities







Item 4.     Submission of
Matters to a Vote of Security Holders




|          |  |                 |            |  |                      |  |         | 
|--------- |  | --------------- | ---------- |  | -------------------- |  | ------- | 
|          |  | Total Votes for |            |  | Total Votes Withheld | 
|          |  | Each Director   |            |  | From Each Director   | 
|          |  |                 |            |  |                      | 
|Mr. Child |  |                 | 48,487,425 |  |                      |  | 415,284 | 
|Mr. Shirk |  |                 | 48,622,631 |  |                      |  | 280,078 | 



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|                           |  |              |            |  |                  |  |            |             |  |  |           | 
|-------------------------- |  | ------------ | ---------- |  | ---------------- |  | ---------- | ----------- |  |  | --------- | 
|                           |  | Total Votes  |            |  | Total Votes      |  |            | Total Votes | 
|                           |  | For the Plan |            |  | Against the Plan |  |            | Abstained   | 
|                           |  |              |            |  |                  |  |            |             | 
|2005 Equity Incentive Plan |  |              | 25,514,445 |  |                  |  | 13,293,182 |             |  |  | 5,481,434 | 




Item 5.     Other
Information







Item 6.     Exhibits


|        |    |       |             |                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |       |            
|Number  |    |       | Description
|        |    |       |            
|        | 3  | .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    |             | By-Laws of the Company (incorporated by reference to
    exhibit 3.2 to our Registration Statement on Form S-3
    (No. 335-108831)).                                                                                                                                                                                              
|       
|        | 4  | .1    |             | Form of share certificate for common stock (incorporated by
    reference to exhibit 4.1 to our Registration Statement on
    Form S-1 (No. 333-347410)).                                                                                                                                                                          
|       
|        | 4  | .2    |             | AMERIGROUP Corporation Second Restated Investor Rights
    Agreement, dated July 28, 1998 (incorporated by reference
    to exhibit 4.2 to our Registration Statement on
    Form S-l (No. 333-347410)).                                                                                                                           
|       
|        | 10 | .6.9  |             | Amendment to Amended and Restated Contract between State of New
    Jersey, Department of Human Services, Division of Medical
    Assistance and Health Services and AMERIGROUP New Jersey,
    Inc. dated July 1, 2005.                                                                                                           
|       
|        | 10 | .6.10 |             | Amendment to Amended and Restated Contract between State of New
    Jersey, Department of Human Services, Division of Medical
    Assistance and Health Services and AMERIGROUP New Jersey,
    Inc. dated July 1, 2005 regarding Dental Services.                                                                                 
|       
|        | 10 | .7.7  |             | Amendment, dated March 15, 2004, to the State of Illinois
    Department of Public Aid Contract for Furnishing Health Services
    by a Health Maintenance Organization.                                                                                                                                                           
|       
|        | 10 | .17.8 |             | Amendment No. 2 to the Amended Restated Credit Agreement
    dated October 22, 2003, among AMERIGROUP Corporation, the
    Guarantors and the Lenders, named therein, dated May 10,
    2005 (incorporated by reference to Exhibit 10.1 to our
    Current Report on Form 8-K, filed on May 13, 2005).                             
|       
|        | 10 | .22.7 |             | Amendment No. 00017, dated March 1, 2005, to the District
    of Columbia Healthy Families Programs, Department of Health
    Medical Assistance Administration, Prepaid, Capital Risk
    Contract (POHC-2002-D-2003) (incorporated by reference to
    Exhibit 22.7 to our Current Report on Form 8-K, filed on
    May 5, 2005).
|       
|        | 10 | .23.3 |             | Amendment No. 13, dated August 31, 2004, to the
    September 1, 2002 Contract for Services between the HHS and
    HMO (Childrens Health Insurance Program Agreement
    (No. 52-00-139-M)) (incorporated by reference to
    Exhibit 23.3 to our Current Report on Form 8-K, filed on
    May 5, 2005).                          
|       
|        | 10 | .25.3 |             | Amendment No. 4, dated February 28, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 25.3 to our Current Report on Form
    8-K, filed on May 5,2005).  

23



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|        |    |       |             |                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |       |            
|Number  |    |       | Description
|        |    |       |            
|        | 10 | .25.4 |             | Amendment No. 5, dated March 31, 2005, to the
    June 28, 2002 Medial Contract between the State of Florida,
    Agency for Health Care Administration and AMERIGROUP Florida
    Inc. (AHCA Contract No. FA523) (incorporated by reference to
    Exhibit 25.4 to our Current Report on Form 8-K, filed
    on May 5, 2005).     
|       
|        | 10 | .25.5 |             | Amendment No. 6, dated May 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.1 to our Current Report on
    Form 8-K, filed on May 5, 2005).       
|       
|        | 10 | .25.6 |             | Amendment No. 7, dated June 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.1 to our Current Report on
    Form 8-K, filed on June 15, 2005).    
|       
|        | 10 | .25.7 |             | Amendment No. 8, dated July 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.2 to our Current Report on
    Form 8-K, filed on July 26, 2005).    
|       
|        | 10 | .25.8 |             | Amendment No. 9, dated July 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.3 to our Current Report on
    Form 8-K, filed on July 26, 2005).    
|       
|        | 10 | .45   |             | Form 2005 Equity Incentive Plan of the Company (incorporated by
    reference to Exhibit A to our proxy statement, dated
    April 4, 2005 and Exhibits 10.1, 10.2 and 10.3 to our
    Current Report on Form 8-K, filed on May 13, 2005 and
    Exhibit 10.4 to our Current Report on Form 8-K, filed on
    May 9, 2005).        
|       
|        | 10 | .46   |             | Form 2003 Cash Incentive Plan of the Company (incorporated by
    reference to exhibit 10.38 to our Quarterly Report of
    Form 10-Q for the last quarter ended June 30, 2003,
    filed on August 11, 2003).                                                                                                                     
|       
|        | 10 | .47   |             | Closing Agreement dated January 3, 2005, between CarePlus,
    LLC and AMERIGROUP Corporation (incorporated by reference to
    Exhibit 10.47 to our Current Report on Form 8-K, filed on
    January 6, 2005).                                                                                                                    
|       
|        | 10 | .48   |             | Medicaid Contract between New York City Department of Health,
    and Mental Hygiene and CarePlus, L.L.C. date October 1,
    2004 (incorporated by reference to Exhibit 10.48 to our
    Current Report on Form 8-K, filed on May 5, 2005).                                                                                       
|       
|        | 10 | .48.1 |             | Contract Amendment, dated January 1, 2005, to the Medicaid
    Managed Care Model Contract between New York City Department of
    Health and Mental Hygiene and CarePlus LLC. Dated
    October 1, 2004 (incorporated by reference to
    Exhibit 10.48.1 to our Current Report on Form 8-K, filed on
    May 5, 2005.)           
|       
|        | 10 | .49   |             | Child Health Plus by and between The State of New York
    Department of Health and Care Plus Health Plan is effective for
    the period July 1, 1998 through June 30, 2005
    (Contract No. C-015473) (incorporated by reference to
    Exhibit 10.49 to our Current Report on Form 8-K, filed on
    May 5, 2005).             
|       
|        | 10 | .50   |             | Family Health Plus Model Contract by and between New York State
    Department of Health and CarePlus LLC is effective for the
    period October 1, 2001 through September 30, 2003
    (Contract No. C-017699) (incorporate by reference to
    Exhibit 10.50 to our Current Report filed on Form 8-K,
    filed on May 6, 2005).
|       
|        | 10 | .51   |             | Medicaid Managed Care Model Contract by and between the County
    of Putnam Department of Social Services and CarePlus Health Plan
    dated October 1, 2004 (incorporated by reference to
    Exhibit 10.51 to our Current Report on Form 8-K, filed on
    May 6,                                                               
|       
|        | 10 | .51.1 |             | Contract Amendment dated January 1, 2005, to the Medicaid
    Managed Care Model Contract by and between the County of Putnam
    Department of Social Services and Care Plus Health Plan
    (incorporated by reference to Exhibit 10.51.1 to our
    Current Report on Form 8-K, filed on May 6, 2005).                          

24



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##### Table of Contents



|        |    |       |             |                                                                                                                                                                                                                                                                                                                                                                
|------- | -- | ----- | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |       |            
|Number  |    |       | Description
|        |    |       |            
|        | 10 | .60   |             | Contract dated July 19, 2005 between Georgia Department of
    Community Health and AMGP Georgia Managed Care Company, Inc. for
    the period from July 1, 2005 through June 30, 2006
    with six optional renewal periods (incorporated by reference to
    Exhibit 10.1 to our Current Report on Form 8-K, filed on
    July 26, 2005).                    
|       
|        | 10 | .60.1 |             | Contract rates to contract dated July 19, 2005 between
    Georgia Department of Community Health and AMGP Georgia Managed
    Care Company, Inc. for the period from July 1, 2005 through
    June 30, 2006 with six optional renewal periods
    (incorporated by reference to Exhibit 10.1.1 to our Current
    Report on Form 8-K, filed on July 26, 2005).
|       
|        | 31 | .1    |             | Certification of Chief Executive Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 3, 2005.                                                                                                                                                                                                                                  
|       
|        | 31 | .2    |             | Certification of Chief Accounting Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 3, 2005.                                                                                                                                                                                                                                 
|       
|        | 32 | .1    |             | Certification of Chief Executive Officer and Chief Accounting
    Officer pursuant to Section 906 of Sarbanes-Oxley Act of
    2002, dated August 3, 2005.                                                                                                                                                                                                     

25



---



##### Table of Contents



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/ Jeffrey L. McWaters

| |                    
| | -------------------
| |                    
| | Jeffrey L. McWaters
| | Chairman and Chief 
| | Executive Officer  





| |     |                      
| | --- | ---------------------
| | By: | /s/ E. Paul Dunn, Jr.

| |                                      
| | -------------------------------------
| |                                      
| | E. Paul Dunn, Jr.                    
| | Executive Vice President,            
| | Chief Financial Officer and Treasurer



26



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##### Table of Contents



|        |    |       |             |                                                                                                                                                                                                                                                                                                                                    
|------- | -- | ----- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |       |            
|Number  |    |       | Description
|        |    |       |            
|        | 3  | .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    |             | By-Laws of the Company (incorporated by reference to
    exhibit 3.2 to our Registration Statement on Form S-3
    (No. 333-108831)).                                                                                                                                                                                              
|       
|        | 4  | .1    |             | Form of share certificate for common stock (incorporated by
    reference to exhibit 4.1 to our Registration Statement on
    Form S-1 (No. 333-347410)).                                                                                                                                                                          
|       
|        | 4  | .2    |             | AMERIGROUP Corporation Second Restated Investor Rights
    Agreement, dated July 28, 1998 (incorporated by reference
    to exhibit 4.2 to our Registration Statement on
    Form S-l (No. 333-347410)).                                                                                                                           
|       
|        | 10 | .6.9  |             | Amendment to Amended and Restated Contract between State of New
    Jersey, Department of Human Services, Division of Medical
    Assistance and Health Services and AMERIGROUP New Jersey,
    Inc. dated July 1, 2005.                                                                                                           
|       
|        | 10 | .6.10 |             | Amendment to Amended and Restated Contract between State of New
    Jersey, Department of Human Services, Division of Medical
    Assistance and Health Services and AMERIGROUP New Jersey,
    Inc. dated July 1, 2005 regarding Dental Services.                                                                                 
|       
|        | 10 | .7.7  |             | Amendment, dated March 15, 2004, to the State of Illinois
    Department of Public Aid Contract for Furnishing Health Services
    by a Health Maintenance Organization.                                                                                                                                                           
|       
|        | 10 | .17.8 |             | Amendment No. 2 to the Amended Restated Credit Agreement
    dated October 22, 2003, among AMERIGROUP Corporation, the
    Guarantors and the Lenders, named therein, dated May 10,
    2005 (incorporated by reference to Exhibit 10.1 to our
    Current Report on Form 8-K, filed on May 13, 2005).                             
|       
|        | 10 | .22.7 |             | Amendment No. 00017, dated March 1, 2005, to the District
    of Columbia Healthy Families Programs, Department of Health
    Medical Assistance Administration, Prepaid, Capital Risk
    Contract (POHC-2002-D-2003) (incorporated by reference to
    Exhibit 22.7 to our Current Report on Form 8-K, filed
    on May 5, 2005).
|       
|        | 10 | .23.3 |             | Amendment No. 13, dated August 31, 2004, to the
    September 1, 2002 Contract for Services between the HHS and
    HMO (Childrens Health Insurance Program Agreement
    (No. 52-00-139-M)) (incorporated by reference to
    Exhibit 23.3 to our Current Report on Form 8-K, filed
    on May 5, 2005).                          
|       
|        | 10 | .25.3 |             | Amendment No. 4, dated February 28, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 25.3 to our Current Report on
    Form 8-K, filed on May 5, 2005). 
|       
|        | 10 | .25.4 |             | Amendment No. 5, dated March 31, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 25.4 to our Current Report on
    Form 8-K, filed on May 5, 2005).    
|       
|        | 10 | .25.5 |             | Amendment No. 6, dated May 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.1 to our Current Report on
    Form 8-K, filed on May 5, 2005).       
|       
|        | 10 | .25.6 |             | Amendment No. 7, dated June 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.1 to our Current Report on
    Form 8-K, filed on June 15, 2005).    
|       
|        | 50 | .25.7 |             | Amendment No. 8, dated July 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.2 to our Current Report on
    Form 8-K, filed on July 26, 2005).    
|       
|        | 10 | .25.8 |             | Amendment No. 9, dated July 1, 2005, to the
    June 28, 2002 Medical Contract between the State of
    Florida, Agency for Health Care Administration and AMERIGROUP
    Florida Inc. (AHCA Contract No. FA523) (incorporated by
    reference to Exhibit 10.3 to our Current Report on
    Form 8-K, filed on July 26, 2005).    



---



##### Table of Contents



|        |    |       |             |                                                                                                                                                                                                                                                                                                                                                                
|------- | -- | ----- | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |       |            
|Number  |    |       | Description
|        |    |       |            
|        | 10 | .45   |             | Form 2005 Equity Incentive Plan of the Company (incorporated by
    reference to Exhibit A to our proxy statement, dated
    April 4, 2005 and Exhibits 10.1, 10.2 and 10.3 to our
    Current Report on Form 8-K, filed on May 13, 2005 and
    Exhibit 10.4 to our Current Report on Form 8-K, filed on
    May 9, 2005).                                    
|       
|        | 10 | .46   |             | Form 2003 Cash Incentive Plan of the Company (incorporated by
    reference to exhibit 10.38 to our Quarterly Report of
    Form 10-Q for the last quarter ended June 30, 2003,
    filed on August 11, 2003).                                                                                                                                                 
|       
|        | 10 | .47   |             | Closing Agreement dated January 3, 2005, between CarePlus,
    LLC and AMERIGROUP Corporation (incorporated by reference to
    Exhibit 10.47 to our Current Report on Form 8-K, filed on
    January 6, 2005).                                                                                                                                                
|       
|        | 10 | .48   |             | Medicaid Contract between New York City Department of Health and
    Mental Hygiene and CarePlus, L.L.C. date October 1, 2004
    (incorporated by reference to Exhibit 10.48 to our Current
    Report on Form 8-K, filed on May 5, 2005).                                                                                                                    
|       
|        | 10 | .48.1 |             | Contract Amendment, dated January 1, 2005, to the Medicaid
    Managed Care Model Contract between New York City Department of
    Health and Mental Hygiene and CarePlus LLC. Dated
    October 1, 2004 (incorporated by reference to
    Exhibit 10.48.1 to our Current Report on Form 8-K, filed on
    May 5, 2005.)                                       
|       
|        | 10 | .49   |             | Child Health Plus by and between The State of New York
    Department of Health and Care Plus Health Plan is effective for
    the period July 1, 1998 through June 30, 2005
    (Contract No. C-015473) (incorporated by reference to
    Exhibit 10.49 to our Current Report on Form 8-K, filed on
    May 5, 2005).                                         
|       
|        | 10 | .50   |             | Family Health Plus Model Contract by and between New York State
    Department of Health and CarePlus LLC is effective for the
    period October 1, 2001 through September 30, 2003
    (Contract No. C-017699) (incorporate by reference to
    Exhibit 10.50 to our Current Report filed on Form 8-K,
    filed on May 6, 2005).                            
|       
|        | 10 | .51   |             | Medicaid Managed Care Model Contract by and between the County
    of Putnam Department of Social Services and CarePlus Health Plan
    dated October 1, 2004 (incorporated by reference to
    Exhibit 10.51 to our Current Report on Form 8-K, filed on
    May 6,                                                                                           
|       
|        | 10 | .51.1 |             | Contract Amendment dated January 1, 2005, to the Medicaid
    Managed Care Model Contract by and between the County of Putnam
    Department of Social Services and Care Plus Health Plan
    (incorporated by reference to Exhibit 10.51.1 to our
    Current Report on Form 8-K, filed on May 6, 2005).                                                      
|       
|        | 10 | .60   |             | Contract dated July 19, 2005 between Georgia Department of
    Community Health and AMGP Georgia Managed Care Company, Inc. for
    the period from July 1, 2005 through June 30, 2006
    with six optional renewal periods (incorporated by reference to
    Exhibit 10.1 to our Current Report on Form 8-K, filed on
    July 26, 2005).                    
|       
|        | 10 | .60.1 |             | Contract rates to contract dated July 19, 2005 between
    Georgia Department of Community Health and AMGP Georgia Managed
    Care Company, Inc. for the period from July 1, 2005 through
    June 30, 2006 with six optional renewal periods
    (incorporated by reference to Exhibit 10.1.1 to our Current
    Report on Form 8-K, filed on July 26, 2005).
|       
|        | 31 | .1    |             | Certification of Chief Executive Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 3, 2005.                                                                                                                                                                                                                                  
|       
|        | 31 | .2    |             | Certification of Chief Accounting Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    August 3, 2005.                                                                                                                                                                                                                                 
|       
|        | 32 | .1    |             | Certification of Chief Executive Officer and Chief Accounting
    Officer pursuant to Section 906 of Sarbanes-Oxley Act of
    2002, dated August 3, 2005.