Amerigroup Corporation (NYSE: AGP) today announced that net income for the second quarter of 2010 was $67.2 million, or $1.31 per diluted share, versus net income of $49.6 million, or $0.94 per diluted share, for the second quarter of 2009. Second quarter of 2009 results were positively impacted by a tax adjustment of $0.43 per diluted share related to litigation settled in 2008. Excluding the tax adjustment, second quarter of 2009 net income would have been $27.2 million, or $0.51 per diluted share.
Highlights include:
- Membership increased 41,000 members, or 2.2%, to approximately 1.9 million at the end of the second quarter compared to the first quarter of 2010, and a 10.5% increase over the second quarter of 2009.
- Second quarter total revenues were $1.4 billion, a 4.8% increase over the first quarter of 2010, and an 11.3% increase over the second quarter of 2009.
- Health benefits expense was 82.3% of premium revenues for the second quarter of 2010.
- Selling, general and administrative expenses were 7.5% of total revenues for the second quarter of 2010.
- Cash provided by operations was $116.4 million for the three months ended June 30, 2010.
- Unregulated cash and investments were $239.5 million as of June 30, 2010.
- Medical claims payable, as of June 30, 2010, totaled $525.6 million compared to $549.2 million, as of March 31, 2010.
- Days in claims payable was 41, compared to 43 days in the previous quarter.
- The Company repurchased approximately 1.05 million shares of its common stock during the second quarter for approximately $36.7 million.
- In May of 2010, the Texas Health and Human Services Commission announced that Amerigroup's Texas health plan was selected through a competitive procurement to expand health care coverage to seniors and people with disabilities in the six county service area surrounding Fort Worth. Pending final contract negotiations, the Company anticipates beginning operations in early 2011.
"We are pleased with our performance in the second quarter and first-half of the year. More than any other time in our history, our state partners need the value we offer – expanded access to care, better coordination of services and clinical outcomes, as well as cost containment for their Medicaid-dependant populations," said James G. Carlson, Amerigroup's chairman and chief executive officer. "In particular, we are excited about our expansion of coverage to seniors and people with disabilities in Fort Worth, Texas, which is expected to begin in early 2011. The STAR+PLUS program is a national model for how to enable people to live independently, improve the quality of their lives and save taxpayer dollars."
Premium Revenues
Premium revenues for the second quarter of 2010 increased 11.2% to $1.4 billion compared to $1.3 billion in the second quarter of 2009. Sequentially, premium revenues increased $62.1 million, or 4.5%, compared with the first quarter of 2010.
The sequential increase in premium revenues primarily reflects the impact of the previously announced New Jersey acquisition and launch of the Tennessee long-term care program, both of which occurred on March 1, 2010. In addition, revenues benefited from continued membership increases across many of the Company's markets due to the macroeconomic environment driving expanded Medicaid participation.
Investment Income and Other Revenues
Second quarter investment income and other revenues were $8.6 million versus $6.5 million in the second quarter of 2009, and compared to $4.9 million in the first quarter of 2010. Investment income and other revenue increased on a sequential basis due to the sale of a trademark for $4.0 million.
Health Benefits
Health benefits expenses, as a percent of premium revenues, were 82.3% for the second quarter of 2010 versus 85.9% in the second quarter of 2009, and compared to 83.5% in the first quarter of 2010. The sequential decrease in the health benefits ratio was primarily due to continued moderate medical trends and normal seasonal declines in medical costs from the first to the second quarter.
Continuing what began most significantly in the fourth quarter of 2009, medical cost trends remained at moderate levels during the quarter. Costs remained in line with or better than expectations in most markets, with all major categories of service exhibiting lower trends in recent periods.