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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2010ORo

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

54-1739323(I.R.S. Employer
    Identification No.)4425 Corporation Lane,
    Virginia Beach, VA(Address of principal
    executive offices)

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




---



##### 



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


Financial Statements


3Condensed Consolidated Balance Sheets as of
    March 31, 2010 and December 31, 2009


3Condensed Consolidated Income Statements for the
    three months ended March 31, 2010 and 2009


4Condensed Consolidated Statement of
    Stockholders Equity for the three months ended
    March 31, 2010


5Condensed Consolidated Statements of Cash Flows
    for the three months ended March 31, 2010 and 2009


6Notes to Condensed Consolidated Financial
    Statements


7Item 2.


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


21Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


32Item 4.


Controls and Procedures


32Part II.
    Other InformationItem 1.


Legal Proceedings


34Item 1A.


Risk Factors


34Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


35Item 3.


Defaults Upon Senior Securities


35Item 4.


Removed and Reserved


35Item 5.


Other Information


35Item 6.


Exhibits


35   2




---



##### 



Part I.
    Financial Information  Item 1.
    Financial
    Statements AMERIGROUP
    Corporation And Subsidiaries





Condensed Consolidated
    Balance Sheets

(Dollars in thousands, except per share data)

(Unaudited)  March 31,


December 31,2010


2009ASSETSCurrent assets:Cash and cash equivalents

$
441,184


$
505,915Short-term investments


196,004



137,523Premium receivables


148,908



104,867Deferred income taxes


26,784



26,361Provider and other receivables


37,638



33,083Prepaid expenses


17,968



8,959Other current assets


5,666



5,274Total current assets


874,152



821,982Long-term investments


683,027



711,196Investments on deposit for licensure


105,964



102,780Property, equipment and software, net of accumulated
    depreciation and amortization of $163,475 and $156,693


99,152



101,002Goodwill


260,496



249,276Other long-term assets


15,668



13,398Total assets

$
2,038,459


$
1,999,634LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Claims payable

$
549,220


$
529,036Accounts payable


3,465



4,685Unearned revenue


47,126



98,298Accrued payroll and related liabilities


57,863



37,311Accrued expenses and other


100,284



89,967Total current liabilities


757,958



759,297Long-term convertible debt


237,765



235,104Deferred income taxes


8,262



8,430Other long-term liabilities


8,870



12,359Total liabilities


1,012,855



1,015,190Stockholders equity:Common stock, $0.01 par value. Authorized 100,000,000 shares;
    issued and outstanding 50,533,257 and 50,638,474 at
    March 31, 2010 and December 31, 2009, respectively


548



546Additional paid-in capital


501,151



494,735Accumulated other comprehensive income


1,596



1,354Retained earnings


632,814



590,6321,136,109



1,087,267Less treasury stock at cost (4,232,927 and 3,956,560 shares at
    March 31, 2010 and December 31, 2009, respectively)


(110,505
)


(102,823
)Total stockholders equity


1,025,604



984,444Total liabilities and stockholders equity

$
2,038,459


$
1,999,634    3




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries Condensed
    Consolidated Income Statements (Dollars
    in thousands, except per share data)
    (Unaudited)
  Three Months EndedMarch 31,2010


2009Revenues:Premium

$
1,366,767


$
1,217,447Investment income and other


4,882



12,347Total revenues


1,371,649



1,229,794Expenses:Health benefits


1,141,572



1,019,303Selling, general and administrative


117,423



110,375Premium tax


31,472



28,118Depreciation and amortization


8,710



8,326Interest


3,990



4,238Total expenses


1,303,167



1,170,360Income before income taxes


68,482



59,434Income tax expense


26,300



22,525Net income

$
42,182


$
36,909Net income per share:Basic net income per share

$
0.83


$
0.70Weighted average number of common shares outstanding


50,550,754



52,684,000Diluted net income per share

$
0.82


$
0.69Weighted average number of common shares and dilutive potential
    common shares outstanding


51,226,435



53,424,802    4




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries Condensed
    Consolidated Statement of Stockholders Equity
    Three Months Ended March 31, 2010 (Dollars
    in thousands)
    (Unaudited)
   AccumulatedAdditional


Other











TotalCommon Stock


Paid-in


Comprehensive


Retained


Treasury Stock


StockholdersShares


Amount


Capital


Income


Earnings


Shares


Amount


EquityBalances at December 31, 2009


50,638,474


$
546


$
494,735


$
1,354


$
590,632



3,956,560


$
(102,823
)

$
984,444Common stock issued upon exercise of stock options and vesting
    of restricted stock grants


171,150



2



1,850



















1,852Compensation expense related to share-based payments










4,427



















4,427Tax benefit related to share-based payments










139



















139Common stock redeemed for payment of employee taxes


(25,787
)


















25,787



( 700
)


( 700
)Common stock repurchases


(250,580
)


















250,580



(6,982
)


(6,982
)Unrealized gain on
    available-for-
    sale securities, net of tax














242















242Net income


















42,182











42,182Balances at March 31, 2010


50,533,257


$
548


$
501,151


$
1,596


$
632,814



4,232,927


$
(110,505
)

$
1,025,604    5




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries Condensed
    Consolidated Statements of Cash Flows (Dollars
    in thousands)
    (Unaudited)
  Three Months EndedMarch 31,2010


2009Cash flows from operating activities:Net income

$
42,182


$
36,909Adjustments to reconcile net income to net cash (used in)
    provided by operating activities:Depreciation and amortization


8,710



8,326Loss on disposal or abandonment of property, equipment and
    software


8



21Deferred tax (benefit) expense


(821
)


4,894Compensation expense related to share-based payments


4,427



2,924Convertible debt non-cash interest


2,661



2,494Gain on sale of contract rights






(5,810
)Other


1,903



242Changes in assets and liabilities (decreasing) increasing cash
    flows from operations:Premium receivables


(44,041
)


2,129Prepaid expenses, provider and other receivables and other
    current assets


(15,567
)


(22,830
)Other assets


(783
)


522Claims payable


20,184



34,328Accounts payable, accrued expenses and other current liabilities


28,949



(6,739
)Unearned revenue


(51,172
)


(17,100
)Other long-term liabilities


(3,489
)


(4,204
)Net cash (used in) provided by operating activities


(6,849
)


36,106Cash flows from investing activities:Proceeds from sale of trading securities


2,950



Proceeds from sale of
    available-for-sale
    securities


213,793



Purchase of
    available-for-sale
    securities


(248,224
)


Proceeds from redemption of
    held-to-maturity
    securities






132,655Purchase of
    held-to-maturity
    securities






(135,189
)Proceeds from redemption of investments on deposit for licensure


18,315



19,515Purchase of investments on deposit for licensure


(21,481
)


(33,119
)Purchase of property, equipment and software


(6,435
)


(6,339
)Purchase of contract rights and related assets


(13,420
)


Proceeds from sale of contract rights






5,810Net cash used in investing activities


(54,502
)


(16,667
)Cash flows from financing activities:Repayment of borrowings under credit facility






(127
)Net decrease in bank overdrafts






(2,492
)Customer funds administered


1,611



(1,552
)Proceeds from exercise of stock options and employee stock
    purchases


1,852



1,451Repurchase of common stock shares


(6,982
)


(6,375
)Tax benefit related to share-based payments


139



638Net cash used in financing activities


(3,380
)


(8,457
)Net (decrease) increase in cash and cash equivalents


(64,731
)


10,982Cash and cash equivalents at beginning of period


505,915



763,272Cash and cash equivalents at end of period

$
441,184


$
774,254Non-cash disclosures:Common stock redeemed for payment of employee taxes

$
(700
)

$
(572
)Unrealized gain (loss) on
    available-for-sale
    securities, net of tax

$
242


$
(157
)    6




---



##### 



AMERIGROUP
    Corporation And
    SubsidiariesNotes to Condensed Consolidated Financial
    Statements(Dollars
    in thousands, except per share data)
    (Unaudited)
  1.
    Interim Financial Reporting  Basis
    of Presentation
    Form 10-K
  and/or Form 10-Q
  2.
    Earnings per Share    Three Months EndedMarch 31,2010


2009Basic net income per share:Net income

$
42,182


$
36,909Weighted average number of common shares outstanding


50,550,754



52,684,000Basic net income per share

$
0.83


$
0.70Diluted net income per share:Net income

$
42,182


$
36,909Weighted average number of common shares outstanding


50,550,754



52,684,000Dilutive effect of stock options and non-vested stock awards (as
    determined by applying the treasury stock method)


675,681



740,802Weighted average number of common shares and dilutive potential
    common shares outstanding


51,226,435



53,424,802Diluted net income per share

$
0.82


$
0.69    7




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
      3.
    Fair Value Measurements    Cash and cash equivalents, premium receivables, provider and
    other receivables, prepaid expenses, other current assets,
    claims payable, accounts payable, unearned revenue, accrued
    payroll and related liabilities, and accrued expenses and other
    current liabilities:
  Short-term investments, long-term investments, investments on
    deposit for licensure, cash surrender value of life insurance
    policies (included in other long-term assets) and the forward
    contract related to certain auction rate securities (included in
    other long-term assets):
  Convertible Senior Notes:
   8




---



##### 



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





SignificantActive Markets for


Significant Other


UnobservableIdentical Assets


Observable Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Cash and cash equivalents

$
397,692


$
397,692


$



$
Auction rate securities (trading)


8,166











8,166Forward contract related to auction rate securities


885











885Money market funds


20,071



20,071







Available-for-sale
    securities:Auction rate securities


41,471











41,471Certificates of deposit


75,269







75,269



Commercial paper


16,299







16,299



Corporate bonds


208,031







208,031



Debt securities of government sponsored entities


385,997



385,997







Federally insured corporate bonds


43,912



43,912







Municipal bonds


166,539







166,539



U.S. Treasury securities


18,797



18,797







Total assets measured at fair value

$
1,383,129


$
866,469


$
466,138


$
50,522     Fair Value Measurements at Reporting Date UsingQuoted Prices in





SignificantActive Markets for


Significant Other


UnobservableIdentical Assets


Observable Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Cash and cash equivalents

$
481,585


$
481,585


$



$
Auction rate securities (trading)


10,835











10,835Forward contract related to auction rate securities


1,165











1,165Money market funds


21,978



21,978







Available-for-sale
    securities:Auction rate securities


46,003











46,003Certificates of deposit






36,155



36,155



Commercial paper


8,992







8,992



Corporate bonds


210,163







210,163



Debt securities of government sponsored entities


382,976



382,976







Federally insured corporate bonds


47,008



47,008







Municipal bonds


165,681







165,681



U.S. Treasury securities


21,294



21,294







Total assets measured at fair value

$
1,433,835


$
954,841


$
420,991


$
58,003  9




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Three Months Ended


Twelve Months EndedMarch 31, 2010


December 31, 2009Balance at beginning of period

$
58,003


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


468



2,225Total net realized (losses) gains included in earnings


(79
)


224Settlements


(7,870
)


(18,100
)Balance at end of period

$
50,522


$
58,003     available-for-sale
  available-for-sale. other-than-temporary other-than-temporary
  available-for-sale
 10




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    Liabilities
    4.
    Short and Long-Term Investments and Investments on Deposit
    for Licensure  available-for-sale
  Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Holding Gains


Holding Losses


ValueMarch 31, 2010:Certificates of deposit

$
64,113


$
6


$



$
64,119Commercial paper


16,296



3







16,299Corporate bonds


4,557



4



4



4,557Debt securities of government sponsored entities


82,820



18



22



82,816Municipal bonds


28,218



3



8



28,213Total short-term investments

$
196,004


$
34


$
34


$
196,004   Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Holding Gains


Holding Losses


ValueDecember 31, 2009:Certificates of deposit

$
25,000


$
5


$



$
25,005Commercial paper


8,989



3







8,992Corporate bonds


5,605



4



1



5,608Debt securities of government sponsored entities


80,246



37



10



80,273Municipal bonds


17,643



5



3



17,645Total short-term investments

$
137,483


$
54


$
14


$
137,523  11




---



##### 



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


GrossAmortized


Unrealized


Unrealized


FairCost


Holding Gains


Holding Losses


ValueMarch 31, 2010:Auction rate securities, maturing between one year and five years

$
4,000


$



$
219


$
3,781Auction rate securities, maturing in greater than ten years


41,150







3,460



37,690Corporate bonds, maturing within one year


65,314



672



14



65,972Corporate bonds, maturing between one year and five years


135,137



2,366



1



137,502Debt securities of government sponsored entities, maturing
    within one year


89,917



601



8



90,510Debt securities of government sponsored entities, maturing
    between one year and five years


150,307



907



44



151,170Debt securities of government sponsored entities, maturing
    between five years and ten years


6,000







2



5,998Federally insured corporate bonds, maturing within one year


22,029



242







22,271Federally insured corporate bonds, maturing between one year and
    five years


21,175



473



7



21,641Municipal bonds, maturing within one year


6,625



12







6,637Municipal bonds, maturing between one year and five years


28,510



137



25



28,622Municipal bonds, maturing between five years and ten years


30,583



303



63



30,823Municipal bonds, maturing in greater than ten years


71,851



411



18



72,244Total long-term investments

$
672,598


$
6,124


$
3,861


$
674,861   12




---



##### 



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


GrossAmortized


Unrealized


Unrealized


FairCost


Holding Gains


Holding Losses


ValueDecember 31, 2009:Auction rate securities, maturing between one year and five years

$
4,000


$



$
231


$
3,769Auction rate securities, maturing in greater than ten years


46,150







3,916



42,234Corporate bonds, maturing within one year


40,117



623







40,740Corporate bonds, maturing between one year and five years


162,017



1,897



99



163,815Debt securities of government sponsored entities, maturing
    within one year


87,000



831



11



87,820Debt securities of government sponsored entities, maturing
    between one year and five years


163,326



1,142



28



164,440Federally insured corporate bonds, maturing within one year


22,040



316







22,356Federally insured corporate bonds, maturing between one year and
    five years


24,200



459



7



24,652Municipal bonds, maturing within one year


4,969



13







4,982Municipal bonds, maturing between one year and five years


15,271



138



6



15,403Municipal bonds, maturing between five years and ten years


32,632



300



57



32,875Municipal bonds, maturing in greater than ten years


94,366



415



5



94,776U.S. Treasury securities, maturing between one year and five
    years


2,499











2,499Total long-term investments

$
698,587


$
6,134


$
4,360


$
700,361     Purchase





Realized


FairAmount


Realized Gains


Losses


ValueMarch 31, 2010:Auction rate securities, maturing in greater than ten years

$
9,050


$



$
884


$
8,166   Purchase





Realized


FairAmount


Realized Gains


Losses


ValueDecember 31, 2009:Auction rate securities, maturing in greater than ten years

$
12,000


$



$
1,165


$
10,835  13




---



##### 



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


GrossAmortized


Unrealized


Unrealized


FairCost


Holding Gains


Holding Losses


ValueMarch 31, 2010:Cash

$
443


$



$



$
443Certificates of deposit, maturing within one year


11,150











11,150Money market funds


20,071











20,071Available-for-sale
    securities:Debt securities of government sponsored entities, maturing
    within one year


93l



1



1



931Debt securities of government sponsored entities, maturing
    between one year and five years


54,305



314



47



54,572U.S. Treasury securities, maturing within one year


18,051



81



2



18,130U.S. Treasury securities, maturing between one year and five
    years


598



69







667Total

$
105,549


$
465


$
50


$
105,964   Gross


GrossAmortized


Unrealized


Unrealized


FairCost


Holding Gains


Holding Losses


ValueDecember 31, 2009:Cash

$
414


$



$



$
414Certificates of deposit, maturing within one year


11,150











11,150Money market funds


21,978











21,978Available-for-sale
    securities:Debt securities of government sponsored entities, maturing
    within one year


935







1



934Debt securities of government sponsored entities, maturing
    between one year and five years


49,262



285



38



49,509U.S. Treasury securities, maturing within one year


16,189



8



13



16,184U.S. Treasury securities, maturing between one year and five
    years


2,460



151







2,611Total

$
102,388


$
444


$
52


$
102,780   available-for-sale other-than-temporarily
 14




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    Less than 12 Months


12 Months or GreaterGross








GrossUnrealized


Total





Unrealized


TotalFair


Holding


Number of


Fair


Holding


Number ofValue


Losses


Securities


Value


Losses


SecuritiesMarch 31, 2010:Auction rate securities

$



$







$
41,471


$
3,679



12Corporate bonds


5,504



19



3











Debt securities of government sponsored entities


117,817



124



28











Federally insured corporate bond


4,064



7



1











Municipal bonds


42,632



114



20











U.S. Treasury securities


7,005



2



2











Total temporarily impaired securities

$
177,022


$
266



54


$
41,471


$
3,679



12   Less than 12 Months


12 Months or GreaterGross








GrossUnrealized


Total





Unrealized


TotalFair


Holding


Number of


Fair


Holding


Number ofValue


Losses


Securities


Value


Losses


SecuritiesDecember 31, 2009:Auction rate securities

$



$







$
46,003


$
4,147



13Corporate bonds


40,971



100



32











Debt securities of government sponsored entities


44,881



88



13











Federally insured corporate bond


4,076



7



1











Municipal bonds


17,771



71



7











U.S. Treasury securities


9,420



13



2











Total temporarily impaired securities

$
117,119


$
279



55


$
46,003


$
4,147



13   other-than-temporary
  5. Market Updates
  Tennessee
   15




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    6. Summary of Goodwill and Acquired Intangible Assets
      Changes in theCarryingAmount ofGoodwillBalance at December 31, 2009:Goodwill

$
258,155Accumulated impairment losses


(8,879
)249,276Goodwill acquired during the three months ended March 31,
    2010


11,220Balance at March 31, 2010:Goodwill


269,375Accumulated impairment losses


(8,879
)$
260,496     March 31, 2010


December 31, 2009Gross Carrying


Accumulated


Gross Carrying


AccumulatedAmount


Amortization


Amount


AmortizationMembership rights and provider contracts

$
28,171


$
(25,622
)

$
25,971


$
(25,517
)Non-compete agreements and trademarks


1,596



(1,596
)


1,596



(1,596
)$
29,767


$
(27,218
)

$
27,567


$
(27,113
)  16




---



##### 



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




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
    8. Share Repurchase Program
    9. Commitments and Contingencies
  Letter of Credit
    Florida Medicaid Contract Dispute
    fee-for-service
  fee-for-service
  fee-for-service
   18




---



##### 



AMERIGROUP
    Corporation And
    Subsidiaries
  Notes
    to Condensed Consolidated Financial
    Statements  (Continued)
  Legal Proceedings
  Memorial Hermann Litigation
  inter alia, quantum meruit
    Other Litigation
    10. Comprehensive Earnings
    Three Months Ended March 31,2010


2009Net income

$
42,182


$
36,909Other comprehensive income (loss):Unrealized gain (loss) on
    available-for-sale
    securities, net of tax


242



(157
)Comprehensive income

$
42,424


$
36,752  19




---



##### 



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


Twelve Months EndedMarch 31, 2010


December 31, 2009Claims payable, beginning of period

$
529,036


$
536,107Health benefits expense incurred during the period:Related to current year


1,208,760



4,492,590Related to prior years


(67,188
)


(85,317
)Total incurred


1,141,572



4,407,273Health benefits payments during the period:Related to current year


798,460



4,007,789Related to prior years


322,928



406,555Total payments


1,121,388



4,414,344Claims payable, end of period

$
549,220


$
529,036    20




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Forward-looking
    Statements
  Form 10-Q, time-to-time,
    
    our inability to manage medical costs;
    our inability to operate new products and markets at expected
    levels, including, but not limited to, profitability, membership
    and targeted service standards;
    local, state and national economic conditions, including their
    effect on the premium rate increase process and timing of
    payments;
    the effect of laws and regulations and changes in such laws and
    regulations governing the health care industry, including the
    Patient Protection and Affordable Care Act and the Health Care
    and Education Reconciliation Act of 2010 and any regulations
    enacted thereunder;
    changes in Medicaid and Medicare payment levels and
    methodologies;
    increased use of services, increased cost of individual
    services, pandemics, epidemics, the introduction of new or
    costly treatments and technology, new mandated benefits, insured
    population characteristics and seasonal changes in the level of
    health care use;
    our ability to maintain and increase membership levels;
    our ability to enter into new markets or remain in our existing
    markets;
    changes in market interest rates or any disruptions in the
    credit markets;
    our ability to maintain compliance with all minimum capital
    requirements;
    liabilities and other claims asserted against us;
    demographic changes;
    the competitive environment in which we operate;
    the availability and terms of capital to fund acquisitions,
    capital improvements and maintain capitalization levels required
    by regulatory agencies;
    our ability to attract and retain qualified personnel;
    the unfavorable resolution of new or pending litigation; and
    catastrophes, including acts of terrorism or severe weather.  Form 10-K Other
    Information Risk Factors
 21




---



##### 



Overview
    Summary
    highlights of our first quarter of 2010 include:
  
    Membership increased by 206,000 members, or 12.4%, to 1,863,000
    members as of March 31, 2010 compared to 1,657,000 members
    as of March 31, 2009;
    Total revenues of $1.4 billion for the first quarter of
    2010, an 11.5% increase over the first quarter of 2009;
    Health benefits ratio (HBR) of 83.5% of premium
    revenues for the first quarter of 2010 compared to 83.7% in the
    first quarter of 2009;
    Selling, general and administrative expense
    (SG&A) ratio of 8.6% of total revenues for the
    first quarter of 2010 compared to 9.0% in the first quarter of
    2009;
    Cash used in operations was $6.8 million for the three
    months ended March 31, 2010;
    Unregulated cash and investments of $257.4 million as of
    March 31, 2010;
    Claims payable as of March 31, 2010 totaled
    $549.2 million, compared to $529.0 million as of
    December 31, 2009;
    We repurchased 250,580 shares of common stock for
    approximately $7.0 million during the first quarter of 2010;
    On March 1, 2010, our Tennessee health plan began providing
    long-term care (LTC) services to approximately 4,100
    existing members under the States newly created TennCare
    CHOICES program; and
    On March 1, 2010, our New Jersey health plan completed the
    previously announced acquisition of certain assets of University
    Health Plans, Inc. (UHP). As of March 31, 2010,
    we served approximately 158,000 members in New Jersey.     22




---



##### 



Health
    Care Reform
        Market
    Updates
  Tennessee
    New
    Jersey
   23




---



##### 



Texas
    Results
    of Operations
    Three Months EndedMarch 31,2010


2009Premium revenue


99.6
%


99.0
%Investment income and other


0.4



1.0Total revenues


100.0
%


100.0
%Health
    benefits(1)


83.5
%


83.7
%Selling, general and administrative expenses


8.6
%


9.0
%Income before income taxes


5.0
%


4.8
%Net income


3.1
%


3.0
%     (1)
    
    The HBR is shown as a percentage of premium revenue because
    there is a direct relationship between the premium received and
    the health benefits provided.  Three
    Months Ended March 31, 2010 Compared to Three Months Ended
    March 31, 2009
    Three Months Ended March 31,% Change2010


2009


2010-2009Revenues:Premium

$
1,366.8


$
1,217.4



12.3
%Investment income and other


4.9



12.3



(60.5
)%Total revenues


1,371.6



1,229.8



11.5
%Expenses:Health benefits


1,141.6



1,019.3



12.0
%Selling, general and administrative


117.4



110.4



6.4
%Premium tax


31.5



28.1



11.9
%Depreciation and amortization


8.7



8.3



4.6
%Interest


4.0



4.2



(5.9
)%Total expenses


1,303.2



1,170.4



11.3
%Income before income taxes


68.5



59.4



15.2
%Income tax expense


26.3



22.5



16.8
%Net income

$
42.2


$
36.9



14.3
%Diluted net income per share

$
0.82


$
0.69



18.8
%  24




---



##### 



Premium
    Revenue
    Membership
    March 31,2010


2009Texas(1)


510,000



453,000Florida


250,000



253,000Georgia


250,000



213,000Tennessee


202,000



189,000Maryland


197,000



179,000New Jersey


158,000



109,000New York


113,000



111,000Nevada


69,000



49,000Ohio


56,000



60,000Virginia


37,000



26,000New Mexico


21,000



15,000Total


1,863,000



1,657,000     (1)
    
    Membership includes approximately 13,000 members under an ASO
    contract that began June 1, 2009.   25




---



##### 



March 31,Product

2010


2009TANF (Medicaid)


1,309,000



1,141,000CHIP


269,000



264,000ABD
    (Medicaid)(1)


197,000



187,000FamilyCare (Medicaid)


72,000



53,000Medicare Advantage


16,000



12,000Total


1,863,000



1,657,000     (1)
    
    Membership includes approximately 13,000 members under an ASO
    contract in Texas that began June 1, 2009.  Investment
    income and other revenue
      Health
    benefits expenses
      Three Months Ended


Twelve Months EndedMarch 31, 2010


December 31, 2009Claims payable, beginning of period

$
529,036


$
536,107Health benefits expense incurred during the period:Related to current year


1,208,760



4,492,590Related to prior years


(67,188
)


(85,317
)Total incurred


1,141,572



4,407,273Health benefits payments during the period:Related to current year


798,460



4,007,789Related to prior years


322,928



406,555Total payments


1,121,388



4,414,344Claims payable, end of period

$
549,220


$
529,036  26




---



##### 



Selling,
    general and administrative expenses
    Premium
    tax expense
    Provision
    for income taxes
    Significant
    income tax uncertainties
    Liquidity
    and capital resources
   27




---



##### 



Convertible
    Senior Notes
  Form S-3
    and/or and/or
       28




---



##### 



Universal
    Automatic Shelf Registration
    Stock
    Repurchase Program
    Cash and
    Investments
       29




---



##### 



Average S&P%


RatingAuction rate securities


3.5
%


AA+Cash, bank deposits and commercial paper


4.7
%


AAACertificates of deposit


6.8
%


AA+Corporate bonds


14.6
%


A+Debt obligations of government sponsored entities, Federally
    insured  corporate bonds, municipal bonds and U.S. Treasury
    securities


43.4
%


AAAMoney market funds


27.0
%


AAA100.0
%


AA+     available-for-sale 28-35 days
  available-for-sale.
   30




---



##### 



debt-to-total
      Regulatory
    Capital and Dividend Restrictions
   31




---



##### 



Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk      time-to-time
  Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures. Rules 13a-15(e) 15d-15(e)
 32




---



##### 



Changes in Internal Controls over Financial
    Reporting.
 33




---



##### 



Part II.
    Other Information  Item 1.
    Legal
    Proceedings  Form 10-Q
  Item 1A.
    Risk
    Factors  Form 10-K
  Recently
    enacted health care reform and the implementation of these laws
    could have a material adverse effect on our results of
    operations, financial position and liquidity. In addition, if
    the new non-deductible Federal premium tax is imposed as
    enacted, or if we are unable to adjust our business model to
    address this new tax, our results of operations, financial
    position and liquidity may be materially adversely
    affected.
       34




---



##### 



Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Approximate DollarValue of SharesTotal number of


(or Units)Average


Shares (or Units)


that May Yet BeTotal Number of


Price Paid


Purchased as Part of


Purchased UnderShares (or Units)


per Share


Publicly Announced


the Plans orPeriod

Purchased


(or Unit)


Plans or
    Programs(1)


Programs(2)January 1  January 31, 2010


73,890


$
27.72



73,890


$
160,798,687February 1  February 28,
    2010(3)


81,425



25.73



78,900



158,767,923March 1  March 31,
    2010(3)


121,052



29.23



97,790



155,865,623Total


276,367


$
27.79



250,580


$
155,865,623     (1)
    
    Shares purchased during the first quarter of 2010 were purchased
    as part of the Companys existing authorized share
    repurchase program. On March 8, 2010, the Company entered
    into a trading plan in accordance with
    Rule 10b5-1
    of the Exchange Act, to facilitate repurchases of its common
    stock pursuant to its share repurchase program (the
    Rule 10b5-1
    plan). The
    Rule 10b5-1
    plan became effective on May 4, 2010 and expires on
    December 31, 2011, unless terminated earlier in accordance
    with its terms.(2)
    
    The ongoing share repurchase program authorized by the Board of
    Directors allows the Company to repurchase up to
    $200.0 million of shares of its common stock from and after
    August 5, 2009. No duration has been placed on the
    repurchase program and the Company reserves the right to
    discontinue the repurchase program at any time.(3)
    
    Our 2009 Equity Incentive Plan allows, upon approval by the plan
    administrator, stock option recipients to deliver shares of
    unrestricted Company common stock held by the participant as
    payment of the exercise price and applicable withholding taxes
    upon the exercise of stock options or vesting of restricted
    stock. During February and March 2010, certain employees elected
    to tender 2,525 shares and 23,262 shares,
    respectively, to the Company in payment of related withholding
    taxes upon vesting of restricted stock.  Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Removed
    and Reserved  Item 5.
    Other
    Information    Item 6.
    Exhibits   35




---



##### 



Signatures
  Pursuant to the requirements of the Securities Exchange Act
    of 1934, the Registrant has duly caused this Report to be signed
    on its behalf by the undersigned thereunto duly authorized.
  Corporation
  By:
    /s/  James
    G. Carlson   Chairman, President and
 Chief Executive Officer
    By:
    /s/  James
    W. Truess   Executive Vice President and
 Chief Financial Officer
   36




---



##### 



EXHIBITS
  Exhibits.
  Form 10-Q Form 10-Q.
  Form 10-Q
  Form 10-Q
  ExhibitNumber

Description3
.1

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

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

Form of share certificate for common stock (incorporated by
    reference to exhibit 4.1 to our Registration Statement on
    Form S-1
    (No. 333-347410)).4
.2

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

Registration Rights Agreement dated March 28, 2007, between
    AMERIGROUP Corporation, Goldman Sachs, & Co., as
    representative of the initial purchasers (incorporated by
    reference to exhibit 4.2 to our Current Report on
    Form 8-K
    filed on April 2, 2007).31
.1

Certification of Chief Executive Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    May 4, 2010.31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of Sarbanes-Oxley Act of 2002, dated
    May 4, 2010.32


Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of Sarbanes-Oxley Act of
    2002, dated May 4, 2010.  37