-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DJi4+8NG1P6+k89tKACnmU8g+uKImxAeWfCV8BQVMmKryv3vhZOoEb+/hs3wuPFD jcn3Mn8M0dm2tCPE4wBYfQ== 0000891092-04-000760.txt : 20040218 0000891092-04-000760.hdr.sgml : 20040218 20040217173645 ACCESSION NUMBER: 0000891092-04-000760 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040217 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIGROUP CORP CENTRAL INDEX KEY: 0001064863 STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324] IRS NUMBER: 541739323 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31574 FILM NUMBER: 04610602 BUSINESS ADDRESS: STREET 1: 4425 CORPORATION LANE STREET 2: SUITE 100 CITY: VIRGINIA BEACH STATE: VA ZIP: 23462 BUSINESS PHONE: 7574906900 MAIL ADDRESS: STREET 1: 4425 CORPORATION LN CITY: VIRGINIA BEACH STATE: VA ZIP: 23462 8-K 1 e16960_8k.txt FORM 8-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15 (d) of The Securities Exchange Act of 1934 DATE OF REPORT: February 17, 2004 ---------- AMERIGROUP CORPORATION ---------- Delaware 54-1739323 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 4425 Corporation Lane Virginia Beach, VA 23462 (757) 490-6900 www.amerigroupcorp.com - -------------------------------------------------------------------------------- Item 7. Financial Statements and Exhibits. (c) Exhibits Exhibit Number Description - ------- -------------------------------------------------------------- 99.1 Press Release, dated February 17, 2004 by AMERIGROUP Corporation (the "Company"). Item 12. Results of Operations and Financial Condition. Attached as Exhibit 99.1 to this Current Report on Form 8-K is a copy of a press release issued on February 17, 2004 containing financial information for the Company for the quarterly period ended December 31, 2003. The information furnished pursuant to this Current Report on Form 8-K (including the exhibit hereto) shall not be considered "filed" under the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into future filings by the Company under the Securities Act of 1933, as amended or under the Securities Exchange Act of 1934, as amended, unless the Company expressly sets forth in such future filing that such information is to be considered "filed" or incorporated by reference therein. SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERIGROUP Corporation Date: February 17, 2004 By: /s/ KATHLEEN K. TOTH ----------------------------- Name: Kathleen K. Toth Title: Senior Vice President and Chief Accounting Officer (principal financial officer) EXHIBIT INDEX Exhibit Number Description - ------- -------------------------------------------------------------- 99.1 Press Release, dated February 17, 2004 by AMERIGROUP Corporation (the "Company"). EX-99.1 3 e16960ex99_1.txt PRESS RELEASE Exhbit 99.1 AMERIGROUP Corporation Earns $0.69 Per Share in Fourth Quarter on 48 Percent Increase in Net Income Full-Year Revenues up 40% on 45% Increase in Membership VIRGINIA BEACH, Va., Feb. 17 /PRNewswire-FirstCall/ -- AMERIGROUP Corporation (NYSE: AGP) today announced that net income for the fourth quarter of 2003 increased 48 percent to $17,468,000, or $0.69 per diluted share, compared with $11,784,000 or $0.54 per diluted share for the fourth quarter of 2002. For the year ended December 31, 2003, net income increased 43 percent to $67,324,000, or $2.95 per diluted share, compared with $47,036,000, or $2.19 per diluted share for the year ended December 31, 2002. Total revenues for the fourth quarter of 2003 increased 37 percent to $424,189,000, compared with $309,884,000 for the fourth quarter of 2002. For the year ended December 31, 2003, revenues totaled $1,622,234,000, up 40 percent from $1,160,662,000 for the year ended December 31, 2002. Membership increased 45 percent to 857,000 at December 31, 2003, compared with 591,000 at December 31, 2002. Additional highlights of the quarter and the full year: * Successfully integrated 193,000 members relating to the PHP acquisition, which was effective January 1, 2003, and 26,000 members relating to the St. Augustine acquisition effective July 1, 2003; * Achieved a weighted average premium rate increase of 4 percent, which is consistent with our medical cost trend despite extremely tough state budgetary environments; * Insourced behavioral health servicing approximately 463,000 members; * In October we strengthened the balance sheet with the issuance of 3.16 million shares of common stock with net proceeds of approximately $139.0 million, as well as amended the credit facility by increasing its capacity to $95.0 million, which is currently undrawn; * Due to product and market exits, sequential fourth quarter membership was down slightly, 9,000 members or 1 percent, to 857,000 members, while fourth quarter total revenue grew close to 3 percent; * Health benefits ratio of 80.5 and 80.2 percent of premium revenues for the fourth quarter and the full-year 2003, respectively; * Selling, general and administrative expenses of 11.6 and 11.5 percent of total revenues for the fourth quarter and the full-year 2003, respectively; * Days in claims payable within our expected range at 65 days; * Return on average equity of 19 percent; and * Cash flow from operations of $129.4 million in 2003. "AMERIGROUP's consistent financial success in the fourth quarter and for the year reflects our ability to sustain growth despite challenging state budget conditions," said Jeffrey L. McWaters, chairman and chief executive officer. "Our continuing ability to help states succeed in managing growing Medicaid costs is more important than ever. Improving health status through organized systems of care, in fact, remains the only effective way for states to save money responsibly while caring for low-income and uninsured citizens." Health Benefits Consistent with our expectations, health benefits were 80.5 percent of premium revenues for the fourth quarter and 80.2 percent for the year ended December 31, 2003. "Through effective disease management, early case finding and continued improvement in claims payment efficiencies, our medical costs remain stable and predictable. At the same time, our members are receiving appropriate and timely care through our valued and dedicated physician and provider partners," McWaters said. Selling, General and Administrative Expenses Selling, general and administrative expenses were 11.6 percent of total revenues for the fourth quarter and 11.5 percent for the year ended December 31, 2003. Balance Sheet and Cash Flow Highlights Cash and investments at December 31, 2003, totaled $570,449,000, a portion of which is regulated by state regulatory requirements. The unregulated portion at year-end was $199,857,000. Operating cash flows totaled $129,418,000 for the full year. The number of days in claims payable at the end of the fourth quarter was 65 compared to 64 in the third quarter and is consistent with our expected range of 60 to 65 days. Outlook for 2004 AMERIGROUP expects earnings per share of approximately $3.09 to $3.14 in 2004 on net income growth of approximately 20 percent, which is consistent with our previous guidance. Other 2004 full-year expectations, excluding potential acquisitions, are as follows: * Same store revenue growth of 10 to 12 percent, which includes weighted- average rate increases of approximately 3 to 5 percent; * Health benefits ratio less than or equal to 81.0 percent of premium revenues; * Selling, general and administrative expenses of 10.5 to 11.0 percent of total revenues; * Fully diluted shares outstanding of approximately 26.0 million. AMERIGROUP senior management will discuss the Company's fourth quarter and year ended December 31, 2003 results on a conference call, Wednesday, February, 18th at 10:30 a.m. Eastern Time. The conference can be accessed by dialing 1-800-915-4836. A recording of this conference call will be available from 12:00 p.m. Eastern Time on Wednesday, February 18th, until 11:59 p.m. Eastern Time on Wednesday, February 25th. To access the recording, dial 1-800-428-6051 and enter passcode 330467. A live webcast of the call also will be available through the investor relations page on the AMERIGROUP web site at www.amerigroupcorp.com, or through CCBN at www.companyboardroom.com. A 30-day replay of this webcast will be available on these web sites approximately two hours following the conclusion of the live broadcast. AMERIGROUP Corporation, headquartered in Virginia Beach, Virginia, is a multi-state managed health care company focused on serving people who receive health care benefits through publicly sponsored programs including Medicaid, State Children's Health Insurance Program, or SCHIP, and FamilyCare. The Company operates in Texas, New Jersey, Maryland, Illinois, Florida and the District of Columbia. For more information about AMERIGROUP Corporation, please visit the Company's web site at www.amerigroupcorp.com. This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the Securities and Exchange Commission's Fair Disclosure Regulation. This release contains certain "forward-looking" statements, including statements related to expected 2004 performance such as membership, revenues, same-store revenues, operating cash flows, health benefits expenses, seasonality of health benefits expenses, selling, general and administrative expenses, days in claims payable, income tax rates, earnings per share, and net income growth, as well as expectations on the effective date and successful integration of acquisitions and debt levels, made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. These risks and uncertainties include, but are not limited to, national, state and local economic conditions, including their effect on the rate-setting process, timing of payments, as well as the availability and cost of labor, utilities and materials; the effect of government regulations and changes in regulations governing the health care industry, including our compliance with such regulations and their effect on our ability to manage our medical costs; changes in Medicaid payment levels, membership eligibility and methodologies and the application of such methodologies by the government; liabilities and other claims asserted against the company; our ability to attract and retain qualified personnel; our ability to maintain compliance with all minimum capital requirements; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which we operate; our ability to maintain and increase membership levels; and demographic changes. Investors should also refer to our Form 10-K filed with the Securities and Exchange Commission (SEC) on March 14, 2003, and our Form S-3 that was filed with the SEC on September 16, 2003, that became effective on October 9, 2003, for a discussion of risk factors. Given these risks and uncertainties, we can give no assurances that any forward-looking statements will, in fact, transpire and, therefore, caution investors not to place undue reliance on them. We specifically disclaim any obligation to update or revise any forward- looking statements, whether as a result of new information, future developments or otherwise. AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (Dollars in thousands, except per share data) Three months ended Year ended December 31, December 31, 2003 2002 2003 2002 Revenues: Premium $422,338 $307,948 $1,615,508 $1,152,636 Investment income 1,851 1,936 6,726 8,026 Total revenues 424,189 309,884 1,622,234 1,160,662 Expenses: Health benefits 339,831 248,702 1,295,900 933,591 Selling, general and administrative 49,060 37,243 186,856 133,409 Depreciation and amortization 5,777 3,752 23,650 13,149 Interest 352 215 1,913 791 Total expenses 395,020 289,912 1,508,319 1,080,940 Income before income taxes 29,169 19,972 113,915 79,722 Income tax expense 11,701 8,188 46,591 32,686 Net income $17,468 $11,784 $67,324 $47,036 Weighted average number of common shares and dilutive potential common shares outstanding 25,336,292 21,661,514 22,801,650 21,469,422 Diluted net income per share $0.69 $0.54 $2.95 $2.19 The following table sets forth selected operating ratios. All ratios, with the exception of the health benefits ratio, are shown as a percentage of total revenues. Three months ended Year ended December 31, December 31, 2003 2002 2003 2002 Premium revenue 99.6 % 99.4 % 99.6 % 99.3 % Investment income 0.4 0.6 0.4 0.7 Total revenues 100.0 % 100.0 % 100.0 % 100.0 % Health benefits (1) 80.5 % 80.8 % 80.2 % 81.0 % Selling, general and administrative expenses 11.6 % 12.0 % 11.5 % 11.5 % Income before income taxes 6.9 % 6.4 % 7.0 % 6.9 % Net income 4.1 % 3.8 % 4.2 % 4.1 % (1) The health benefits ratio is shown as a percentage of premium revenue because there is a direct relationship between the premium received and the health benefits provided. The following table sets forth the approximate number of members served in each of our service areas as of December 31, 2003 and 2002. December 31, Market 2003 2002 Houston 144,000 139,000 Dallas 93,000 84,000 Fort Worth 106,000 73,000 Maryland 124,000 125,000 District of Columbia 38,000 37,000 New Jersey 99,000 99,000 Chicago 32,000 34,000 Tampa 132,000 - Orlando 42,000 - Miami/Ft. Lauderdale 47,000 - Total 857,000 591,000 The following table sets forth the approximate number of members in each of the products we offer as of December 31, 2003 and 2002. December 31, December 31, Product 2003 2002 AMERICAID (Medicaid - TANF) 587,000 394,000 AMERIKIDS (SCHIP) 180,000 125,000 AMERIPLUS (Medicaid - SSI) 74,000 46,000 AMERIFAM (FamilyCare) 16,000 26,000 Total 857,000 591,000 AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) December 31, December 31, 2003 2002 Assets Current assets: Cash and cash equivalents $407,220 $207,996 Short-term investments 8,750 27,581 Premium receivables 38,259 35,233 Deferred income taxes 10,164 5,627 Prepaid expenses and other current assets 15,995 7,998 Total current assets 480,388 284,435 Property, equipment, and software, net 42,158 40,243 Goodwill and other intangible, net 144,398 26,040 Long-term investments, including investments on deposit for licensure 154,479 100,917 Other long-term assets 4,598 2,716 Escrow deposit for pending acquisitions and related costs - 124,133 $826,021 $578,484 Liabilities and Stockholders' Equity Current liabilities: Claims payable $239,532 $202,430 Unearned revenue 54,324 25,518 Accounts payable 5,523 9,405 Accrued expenses, capital leases and other current liabilities 53,431 42,905 Total current liabilities 352,810 280,258 Long-term debt - 50,000 Deferred income taxes, capital leases and other long-term liabilities 11,497 8,845 Total liabilities 364,307 339,103 Stockholders' equity: Common stock, $.01 par value 244 205 Additional paid-in capital 331,751 177,141 Retained earnings 129,719 62,035 Total stockholders' equity 461,714 239,381 $826,021 $578,484 AMERIGROUP CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year ended December 31, 2003 2002 Cash flows from operating activities: Net income $67,324 $47,036 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,650 13,149 Deferred tax expense (benefit) and other, net (2,912) 1,351 Tax benefit related to option exercises 4,547 3,775 Changes in assets and liabilities increasing (decreasing) cash flows from operations: Premium receivables (3,026) (6,058) Prepaid expenses and other current assets (7,954) (456) Other assets (750) (1,665) Claims payable 16,681 22,084 Unearned revenue 28,806 25,278 Accounts payable, accrued expenses and other current liabilities 504 12,219 Other long-term liabilities 2,548 704 Net cash provided by operating activities 129,418 117,417 Cash flows from investing activities: Proceeds from sale (purchase) of investments, net (28,944) 8,498 Purchase of investments on deposit for licensure, net (5,487) (558) Purchase of property, equipment and software (13,220) (20,707) Purchase of contract rights and related assets (7,628) (6,633) Cash acquired through Florida acquisition 27,483 - Escrow deposit for pending acquisition and related costs - (124,133) Net cash used in investing activities (27,796) (143,533) Cash flows from financing activities: Net proceeds from public offering of common stock 138,829 - Payment of capital lease obligations (4,902) (2,521) Borrowings under credit facility - 50,000 Repayments of credit facility (50,000) - Payment of debt issuance costs (1,428) - Proceeds from exercise of stock options, change in bank overdrafts and other, net 15,103 2,733 Net cash provided by financing activities 97,602 50,212 Net increase in cash and cash equivalents 199,224 24,096 Cash and cash equivalents at beginning of period 207,996 183,900 Cash and cash equivalents at end of period $407,220 $207,996 CONTACT: Julie Loftus Trudell, Vice President, Investor Relations, of AMERIGROUP Corporation, +1-757-321-3535. SOURCE AMERIGROUP Corporation -0- 02/17/2004 /CONTACT: Julie Loftus Trudell, Vice President, Investor Relations, of AMERIGROUP Corporation, +1-757-321-3535/ /Web site: http://www.amerigroupcorp.com/ (AGP) CO: AMERIGROUP Corporation ST: Virginia IN: HEA INS SU: ERN ERP CCA -----END PRIVACY-ENHANCED MESSAGE-----