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2 0 0 5 A N N UA L R E P O RT
To operate a community-focused managed care company with an emphasis on the public sector healthcare market. The Company w...
T  he year 2005 was a pivotal point in the life of AMERIGROUP Corporation. As our Company moved ahead into its second deca...
I  n 2006, AMERIGROUP will officially enter the State of Georgia   s Medicaid managed care  program and launch the largest...
Company expanded into three states, acquiring  AMERIGROUP   s Georgia team the highest technical  CarePlus Health Plan in ...
F  or more than 7 million Americans who are lowincome, older and very sick, nothing is more  important     or more difficu...
low-income people with serious illnesses or disabilities.  On December 1, 2005, AMERIGROUP   s CarePlus  Houston   s dual-...
I  n 2005, the cost of providing healthcare to AMERIGROUP   s members began rising at a  greater rate. In response, the Co...
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  Form 10-K     ANNUAL REPORT PURSUANT TO SECTION 1...
TABLE OF CONTENTS Page  PART I. Business                                                                        Risk Facto...
Forward-looking Statements This Annual Report on Form 10-K, and other information we provide from time-to-time, contains c...
PART I. Item 1.  Business  Overview We are a multi-state managed healthcare company focused on serving people who receive ...
fold from 6.0 million in 1976 to nearly 76.1 million in 2002. Over that time, many HMOs have been formed to focus on a spe...
The highest healthcare expenses for the non-elderly and disabled Medicaid population include    obstetric services,   resp...
and service utilization controls. Generally, state Medicaid budgets are developed and approved annually by the states    g...
Providers In each of the communities where we operate, we have established extensive provider networks and have been succe...
established government relationships and our historical experience in managing Medicaid populations. Our management team i...
  long-term and nursing home care,   24-hour on-call nurses,   vision care and exam allowances,   dental care,   chiroprac...
AMERIVANTAGE is our SNP managed care product for dual eligibles. AMERIVANTAGE is available in Houston, Texas effective Jan...
Community Partners We believe community focus and understanding are important to attracting and retaining members. To assi...
In order to ensure the quality of our medical care providers, we credential and re-credential our providers using standard...
communication from the State. We expect our relationship with these jurisdictions to continue. Each of our health plans ha...
upon 30 days notice. Our Summit Care contract expires June 30, 2006 and we anticipate the new contract to be effective as ...
Ohio Our Ohio subsidiary, AMERIGROUP Ohio, Inc., is licensed as an HMO and began operations in September 2005 in the Cinci...
senior management at our health plans, who review and evaluate the quality of our health services and are responsible for ...
satisfying financial requirements, demonstrating an ability to deliver services, and establishing networks and infrastruct...
approval of the federal government. The waivers most relevant to us are the Section 1915 b  freedom of choice waivers that...
A health plan   s compliance with these requirements is subject to monitoring by the state regulator and by CMS. A health ...
According to HHS, this requirement eliminates the generally outdated regulatory ceiling on what states may pay managed car...
in the final Bill which Congress passed at the end of 2005 and included net savings of  4.75 billion to the Medicaid progr...
Available Information We file annual, quarterly and current reports, proxy statements and all amendments to these reports ...
Item 1A.  Risk Factors RISK FACTORS Risks related to being a regulated entity  Changes in government regulations designed ...
Our failure to comply with government regulations could subject us to civil and criminal penalties and limitations on our ...
2003, regulations were promulgated under HIPAA requiring the use of electronic transactions and code sets for healthcare c...
The Bill includes some provisions that directly affect Medicaid managed care companies. It prohibits the further use of Me...
If a state fails to renew its federal waiver application for mandated Medicaid enrollment into managed care or such applic...
Maryland sets the rates that must be paid to hospitals by all payors. In 2005, the State increased rates payable to the ho...
Our limited ability to predict our incurred medical expenses accurately has in the past and could in the future materially...
We may be unable to successfully identify, consummate and integrate future acquisitions, including integrating the acquire...
Restrictions and covenants in our credit facility could limit our ability to take actions. On May 10, 2005, we entered int...
To the extent that non-network providers are successful in obtaining payment at rates in excess of the rates that we have ...
Our inability to integrate, manage and grow our information systems effectively could disrupt our operations. Our operatio...
Item 1B.  Unresolved Staff Comments  None. Item 2.  Properties  We do not own any real property. We lease office space in ...
amended complaint. The United States Attorneys    Office filed a motion to intervene on behalf of the United States of Ame...
Item 4.  Submission of Matters to a Vote of Security Holders  None. Executive Officers of the Company Our executive office...
served as Executive Vice President     Finance of Pharmacy Corporation of America and as Senior Vice President and Control...
PART II. Item 5.  Market for Registrant   s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Secu...
Item 6.  Selected Financial Data  The following selected consolidated financial data should be read in connection with the...
Item 7.  Management   s Discussion and Analysis of Financial Condition and Results of Operations  Overview We are a multi-...
Christi and El Paso. AMERIGROUP Texas, Inc. was also granted a STAR contract for the Austin service area. AMERIGROUP Texas...
As a result of a competitive-bidding process, our Georgia subsidiary, AMGP Georgia Managed Care Company, Inc.  d b a AMERI...
by the state governments with which we have contracted. Errors in this eligibility determination on which we rely can resu...
associated with the installation of a new medical claims payment system. As we have discussed previously, we transitioned ...
necessary component of our medical liabilities. While our prior year development historically has been favorable, there is...
for Stock Issued to Employees, and SFAS No. 148, Accounting for Stock Based Compensation, and amends FASB Statement of Fin...
The following table sets forth the approximate number of our members in each of our service areas for the periods presente...
ended December 31, 2005 was 84.7  compared to 81.0  in 2004. Our 2005 results have been impacted by an increase in members...
Health benefits Expenses relating to health benefits for the year ended December 31, 2004 increased  173.2 million, or 13....
On May 10, 2005, we entered into an amendment  Amendment  to our Amended and Restated Credit Agreement  as amended, the Cr...
  a decrease in the change in accounts payable, accrued expenses and other liabilities of  18.3 million primarily as a res...
Long-term Borrowings Credit Agreement. On May 10, 2005, we entered into an amendment  Amendment  to our Amended and Restat...
Inflation Although the general rate of inflation has remained relatively stable and healthcare cost inflation has stabiliz...
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders AMERIGROUP Corporation  We...
Item 8.  Financial Statements and Supplementary Data AMERIGROUP CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS  ...
AMERIGROUP CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS Years Ended December 31, 2005 2004 2003  Dollars in...
AMERIGROUP CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS    EQUITY Common stock Shares Amount  Addi...
AMERIGROUP CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2005 2004 2003  Dol...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2005, 2004 and 2003  Dolla...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued   2   a   Summary of Sig...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  Depreciation and amorti...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  No. 148, Accounting for...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  percentage of the contr...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  common shares include a...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  factors, which include ...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  The carrying amount, gr...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  As a condition for lice...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  The following table sho...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued   4   Property and Equip...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  The following table sum...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  The following table sum...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  The following table sum...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  Income tax expense  ben...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  The tax effects of temp...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  of the assets of the Co...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  The following table sum...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued   9   Earnings Per Share...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued   b   Malpractice  We ma...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued   d   Deferred Compensat...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  On May 6, 2005, Plainti...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  corresponding charge to...
AMERIGROUP CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      Continued  2004  Premium revenues ...
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders AMERIGROUP Corporation  Un...
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS  Valuation Allowance on Deferred Tax Assets  Year Ended December 31, 2005   ...
Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  None. Item 9A.  Controls an...
Second, due to the smaller scale of our acquired CarePlus claims operations, we have inappropriate system configuration ac...
The Company, through its subsidiary AMERIGROUP Texas, Inc., entered into an amendment, effective September 1, 2005, to the...
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders AMERIGROUP Corporation  We...
PART III. Item 10.  Directors and Executive Officers of the Company  The information regarding compliance with Section 16 ...
PART IV. Item 15.  Exhibits and Financial Statement Schedules   a  1  Financial Statements. The following financial statem...
Exhibit Number  10.14 10.15 10.16 10.17 10.18 10.19  10.20  10.21  10.22  10.23  10.25.2  10.25.3  10.25.4  10.25.5  10.25...
Exhibit Number  10.25.8  10.25.9  10.26  10.26.1  10.27  10.27.1  10.27.2  10.28  10.29  10.30  10.30.1  10.31  10.31.1  D...
Exhibit Number  10.32.1  10.32.2  10.32.3  10.32.4  10.32.5  10.32.6 10.32.8  10.32.9 21.1 23.1 31.1 31.2 32  Description ...
SIGNATURES Pursuant to the requirements of Section 13 or 15 d  of the Securities Act of 1934, the registrant has duly caus...
J E F F R E Y L . MC W A T E R S  Chairman and Chief Executive Officer AMERIGROUP Corporation THOMAS E. CAPPS, ESQ.  Chair...
J E F F R E Y L . MC W A T E R S  Chairman and Chief Executive Officer JAMES G. CARLSON  President and Chief Operating Off...
Corporate Headquarters AMERIGROUP Corporation 4425 Corporation Lane Virginia Beach, Virginia 23462  757  490-6900 www.amer...
4 4 2 5 C O R P O R AT I O N L A N E VIRGINIA BEACH, VIRGINIA 23462  757  490-6900 W W W . A M E R I G R O U P C O R P. C ...