Amerigroup reports loss of $162.5M for second quarter

VIRGINIA BEACH

Amerigroup Corp., citing the cost of settling a major fraud lawsuit, reported Wednesday that it suffered a loss for the second quarter and said it expected to report a loss for the full year.

Results for the April-through-June quarter came one day after the Virginia Beach-based company announced an agreement to settle litigation that would have imposed $334 million in damages and penalties on the company.

The damages and penalties were imposed after an October 2006 trial in a Chicago federal court for Medicaid fraud. Amerigroup appealed the outcome and had been meeting with the plaintiffs as part of a court-ordered mediation program.

Investors reacted favorably to Amerigroup's settlement announcement and pushed up the price of its shares by $1.35 on Wednesday to close at $26.70.

After the stock market closed, Amerigroup said it lost $162.5 million, or $3.07 per share, for the second quarter.

Without a one-time, after-tax charge of $199.2 million for the settlement, it would have earned $36.7 million in the recent quarter, Amerigroup said. In the year-earlier period, Amerigroup had an income of $32.8 million. Earnings per share would have been 68 cents, up from 61 cents in the 2007 second quarter.

Amerigroup's results for the quarter also included charges related to closing its Washington, D.C., health care plan last month and shutting its health-care plan in Memphis, Tenn., later this year.

Revenues for the quarter rose almost 13 percent, to $1.13 billion, partly due to rate increases in Tennessee and membership growth in most of its health care plans. The company, which has health care plans in 10 states, including Virginia, had 1.7 million members at the end of June.

Amerigroup specializes in managed-care plans for beneficiaries of Medicaid and other government-funded health care programs.

The company, which suspended its earnings guidance in June, said it expected a net loss of $1.35 to $1.45 a diluted share for 2008 because of the one-time charge related to the settlement. Excluding the charge, its earnings for the full year would be between $2.30 and $2.40 a share, Amerigroup said.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com