Amerigroup 1Q profit sinks 53 pct, tops forecasts

VIRGINIA BEACH, Va. (AP) — Health insurer Amerigroup Corp.'s first-quarter earnings dropped 53 percent, as its expenses jumped while it added new members in several states.

The Virginia Beach, Va., company said Wednesday it earned $33.1 million, or 64 cents per share, in the three months that ended March 31. That compares with earnings of $70.5 million, or $1.37 per share, in last year's first quarter. Total revenue climbed 15 percent to $1.77 billion.

The earnings topped Wall Street expectations, and Amerigroup's shares climbed $3.53, or 5.6 percent, to $66.13 by late afternoon, while markets were mixed overall.

Analysts expected, on average, earnings of 59 cents per share on $1.81 billion in revenue, according to FactSet.

Amerigroup manages publically funded health programs like Medicaid, the state-federal program that provides coverage for the needy and disabled. It operates in 12 states, including Texas, Florida, New York and New Jersey.

The insurer started offering Medicaid coverage in Louisiana in the quarter, which added 44,000 people to its enrollment. Amerigroup also expanded its presence in its largest state, Texas, where membership grew 21 percent to 703,000.

Total enrollment climbed more than 10 percent to about 2.2 million people compared to last year's first quarter.

But its health benefits expenses climbed 19 percent to $1.5 billion, or more than 85 percent of revenue, the company said. Selling, general and administrative expenses rose 27 percent to nearly $148 million.

Amerigroup officials said in a statement from the company they expect their earnings will be more heavily weighted toward the back half of 2012, when their profit margin will improve.

The company reiterated its forecast for a 40 percent in annual revenue, including the new business in Louisiana and Texas, its biggest market.