UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Commission File Number 001-31574

AMERIGROUP Corporation

(Exact name of registrants as specified in its charter)

Registrant’s telephone number, including area code:

(757) 490-6900

      Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes þ          No o

      As of May 2, 2005, there were 51,160,228 shares outstanding of AMERIGROUP’s common stock, par value $0.01.

AMERIGROUP Corporation And Subsidiaries

Table Of Contents

Part I. Financial Information

AMERIGROUP Corporation And Subsidiaries

Condensed Consolidated Balance Sheets

See accompanying notes to condensed consolidated financial statements.

AMERIGROUP Corporation And Subsidiaries

Condensed Consolidated Income Statements

See accompanying notes to condensed consolidated financial statements.

AMERIGROUP Corporation And Subsidiaries

Condensed Consolidated Statements Of Cash Flows

      On January 1, 2005, we completed our acquisition of CarePlus, LLC, which operates as CarePlus Health Plan (CarePlus). The following summarizes cash paid for this acquisition:

See accompanying notes to condensed consolidated financial statements.

AMERIGROUP Corporation And Subsidiaries

Notes To Condensed Consolidated Financial Statements

(Dollars in thousands, except for per share data)

      1. The accompanying condensed consolidated financial statements as of March 31, 2005 and for the three month periods ended March 31, 2005 and 2004 are unaudited and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position at March 31, 2005 and operating results for the interim periods. The December 31, 2004 balance sheet information was derived from the audited consolidated financial statements as of that date.

      The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2004 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 9, 2005. The results of operations for the three month period ended March 31, 2005 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2005.

      Certain 2004 amounts have been reclassified to conform to the current period financial statement presentation.

      2. Basic net income per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of common stock outstanding plus other dilutive potential securities. The following table sets forth the calculation of basic and diluted net income per share:

AMERIGROUP Corporation And Subsidiaries

Notes To Condensed Consolidated Financial Statements — (Continued)

      3. As permitted under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), we have chosen to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB Opinion No. 25), and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the estimated fair value of our stock at the date of grant over the amount an employee must pay to acquire the stock. In December 2002, Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure (SFAS No. 148), was issued which requires that we illustrate the effect on net income and net income per share as if we had applied the fair value principles included in SFAS No. 123 for both annual and interim financial statements. The following table illustrates the effect on net income and earnings per share as if the Company had applied fair value recognition.

      As of March 31, 2005, we had 5,670,158 options outstanding with a weighted average exercise price of $22.61. For the three months ended March 31, 2005, we granted 1,556,748 options with a weighted average exercise price of $41.60.

      The fair value of each 2005 option grant is estimated on the date of grant using an option pricing model with the following assumptions: no dividend yield, risk-free interest rate of 4.26%, expected life of 6.20 years and volatility of 26.96%.

      4. Effective January 1, 2005, we completed our stock acquisition of CarePlus, LLC (CarePlus), in New York City, New York for $126,785 in cash, including acquisition costs, pursuant to the terms of the merger agreement entered into on October 26, 2004. Additional consideration may be paid contingent upon the achievement of specific criteria during 2005 and 2006 as follows: $4,000 in the event CarePlus receives approval from and a contract with the State of New York to conduct a long-term care business in the State of New York and enrolls membership in the business by January 1, 2007; up to $10,000 if CarePlus meets certain earnings thresholds during the twelve months ended December 31, 2005; and a multiple of revenues realized for the month ended December 31, 2004 in excess of a contractually agreed target, currently under review. If the criteria are met and additional payments become due, they will be accounted for as an additional cost of the acquisition. Beginning January 1, 2005, the results of operations of CarePlus have been included in the accompanying Condensed Consolidated Income Statements.

      CarePlus served approximately 115,000 New York State Medicaid, Child Health Plus and Family Health Plus members in New York City (Brooklyn, Manhattan, Queens and Staten Island) and Putman County at December 31, 2004 providing us with an entry into the New York market. CarePlus is also authorized to offer

AMERIGROUP Corporation And Subsidiaries

Notes To Condensed Consolidated Financial Statements — (Continued)

a managed long-term care program in New York City subject to final regulatory approval and other considerations.

      This acquisition was accounted for under the purchase method of accounting and was funded with unregulated cash. Goodwill and other intangibles total $114,164 which includes $13,980 of specifically identifiable intangibles allocated to the rights to membership, the provider network, non-compete agreements and trademarks. Intangible assets related to the rights to membership are being amortized based on the timing of the related cash flows with an expected amortization of ten years. Intangible assets related to the provider network are being amortized over ten years on a straight-line basis. Intangible assets related to the trademarks and non-compete agreements are being amortized over 12 to 36 months on a straight-line basis. The merger agreement provides for purchase price adjustments related to the future settlement of certain purchased liabilities. Additionally, as acquisition was recently consummated, we have not yet finalized our fair value analysis. Therefore, the allocation of the purchase price is subject to adjustment.

      The following table summarizes the fair values of the assets acquired and liabilities assumed of CarePlus at the date of the acquisition.

      The following table summarizes intangible assets resulting from the CarePlus transaction:

      The following is the proforma results of operations for the year ended December 31, 2004 as if the acquisition had been completed on January 1, 2004:

AMERIGROUP Corporation And Subsidiaries

Notes To Condensed Consolidated Financial Statements — (Continued)

      5. In April 2004, the Maryland Legislature enacted a budget for the 2005 fiscal year beginning July 1, 2004 that included a provision to reduce the premium paid to managed care organizations (MCOs) that did not meet certain HEDIS scores and whose medical loss ratio was below 84% for the calendar year ended December 31, 2002. In May 2004, the Maryland Secretary of Health and Mental Hygiene, in consultation with Maryland’s legislative leadership, determined our premium recoupment to be $846. A liability for the recoupment was recorded with a corresponding charge to premium revenue during the year ended December 31, 2004. Additionally, the Legislature directed that the Department of Health and Mental Hygiene complete a study by September 2004 on the relevance of the medical loss ratio threshold as an indicator of quality. The results of this study, which were released in October 2004, did not directly address what would happen in the future if an MCO reported a medical loss ratio below 84%. As a result, we believed the Maryland Legislature could enact similar legislation in 2005 as part of its fiscal year 2006 budget, requiring premium recoupment. Accordingly, we recorded a reduction in premium of $6,100 in our financial statements during the year ended December 31, 2004, which was our best estimate of the possible outcome of this issue.

      The Maryland Legislative Session ended on April 11, 2005 and it addressed the medical loss ratio assessment in the following manner. First, no budget action was taken to recoup premium relating to 2003 as it did in the 2004 legislative session. Second, the Legislature amended the existing statute to clarify the process and required that regulations be promulgated by the Department of Health and Mental Hygiene before an action could be taken to recoup premium based upon an MCO’s medical loss ratio. Based on this information, we reversed the reduction in premium that was previously recorded resulting in $6,100 of additional premium revenue in the three months ended March 31, 2005.

      6. In 2002, Cleveland A. Tyson, a former employee of AMERIGROUP Illinois, Inc., filed a federal Qui Tam or whistleblower action against our Illinois subsidiary. The complaint is captioned the United States of America and the State of Illinois, ex rel., Cleveland A. Tyson v. AMERIGROUP Illinois, Inc. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division. The complaint alleges that AMERIGROUP Illinois, Inc. submitted false claims under the Medicaid program. The United States has not sought to intervene in the case. Mr. Tyson’s amended complaint was unsealed and served on AMERIGROUP Illinois, Inc. in June 2003. Therein, Mr. Tyson alleges that AMERIGROUP Illinois, Inc. maintained a scheme to discourage or avoid the enrollment into the health plan of pregnant women and other Medicaid recipients with special needs. In his suit, Mr. Tyson seeks an unspecified amount of damages and statutory penalties of no less than $5 and no more than $11 per violation. Mr. Tyson’s complaint does not specify the number of alleged violations. The court denied AMERIGROUP Illinois, Inc.’s motion to dismiss on September 26, 2004. AMERIGROUP Illinois, Inc. filed a motion for summary judgment in December 2004 and it is pending before the court. On February 15, 2005, we received a motion filed by the State of Illinois on February 10, 2005, seeking court approval to intervene. On March 2, 2005, the court granted the State’s motion to intervene. On March 3, 2005, AMERIGROUP Illinois, Inc. filed a motion to dismiss for lack of subject matter jurisdiction, based upon a recent opinion of the United States Court of Appeals for the District of Columbia Circuit. That motion is pending disposition by the court. On March 3, 2005, the Office of the Attorney General of the State of Illinois issued a subpoena to AMERIGROUP Corporation as part of an investigation pursuant to the Illinois Whistleblower Reward and Protection Act to determine whether a violation of the Act has occurred. AMERIGROUP Corporation has filed a motion objecting to the subpoena on the grounds, among other things, that the subpoena is duplicative of one previously served on AMERIGROUP Corporation in the federal court Tyson litigation with which AMERIGROUP Corporation is complying.

      At this time, discovery is ongoing and no trial date has been set. Although it is possible that the outcome of this case will not be favorable to us, no range of liability can be estimated. Accordingly, we have not recorded any liability at March 31, 2005. There can be no assurance that the ultimate outcome of this matter will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

AMERIGROUP Corporation And Subsidiaries

Notes To Condensed Consolidated Financial Statements — (Continued)

      7. On December 16, 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004) (SFAS No. 123(R)), Shared-Based Payment, which is a revision of SFAS No. 123. SFAS No. 123(R) supersedes APB 25, SFAS 148 and amends Statement of Financial Accounting Standards No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Proforma disclosure is no longer an alternative.

      SFAS No. 123(R) must be adopted no later than January 1, 2006. Early adoption will be permitted in periods in which financial statements have not yet been issued. We expect to adopt SFAS No. 123(R) on January 1, 2006.

      SFAS No. 123(R) permits public companies to adopt its requirements using one of two methods:

      We are in the process of evaluating these methods.

      As permitted by SFAS No. 123, we currently account for share-based payments to employees using APB Opinion No. 25’s intrinsic value method and, as such, generally recognize no compensation cost for employee stock options. Accordingly, the adoption of the fair value method of SFAS No. 123(R) will have a significant impact on our results of operations, although it will have no impact on our overall financial position. The impact of adoption of SFAS No. 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had we adopted SFAS No. 123(R) in prior periods, the impact of the standard would have approximated the impact of SFAS No. 123 as described in the disclosure of proforma net income and earnings per share in Note 2. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. While we cannot estimate what those amounts will be in the future (because they depend on, among other things, when employees exercise stock options), the amount of operating cash flows recognized in prior periods for such excess tax deductions were $6,210 and $2,397 for the three months ended March 31, 2005 and 2004, respectively.

      8. The differences between net income and total comprehensive income resulted from changes in unrealized gains and losses on investments available-for-sale, as follows:

Forward-looking Statements

      This Quarterly Report on Form 10-Q, and other information we provide from time-to-time, contains certain “forward-looking” statements as that term is defined by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements regarding our expected future financial position, membership, results of operations or cash flows, our continued performance improvements, our ability to service our debt obligations and refinance our debt obligations, our ability to finance growth opportunities, our ability to respond to changes in government regulations and similar statements including, without limitation, those containing words such as “believes,” “anticipates,” “expects,” “may,” “will,” “should,” “estimates,” “intends,” “plans” and other similar expressions are forward-looking statements.

      Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements as a result of, but not limited to, the following factors:

      Investors should also refer to our Annual Report on Form 10-K for the fiscal period ended December 31, 2004 filed with the Securities and Exchange Commission on March 9, 2005 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.

Overview

      We are a multi-state managed healthcare company focused on serving people who receive healthcare benefits through publicly sponsored programs, including Medicaid, SCHIP and FamilyCare. We were founded in December 1994 with the objective of becoming the leading managed care organization in the U.S. focused on serving people who receive these types of benefits. Having concluded our tenth year of operations, we continue to believe that managed healthcare remains the only proven mechanism that significantly reduces medical cost trends and helps our state partners control their costs.

      In our first quarter ended March 31, 2005, we increased our total revenues by 31.4% over the same period in 2004. Total membership increased 180,000, or 20.8%, to 1,047,000 as of March 31, 2005, from 867,000 as of March 31, 2004. Our revenue growth was due to a number of factors including:

      For the three months ended March 31, 2005, our health benefits ratio (HBR) was 82.0% versus 81.0% in the same period of the prior year. The HBR increase is driven primarily by a higher incidence of flu in the first quarter of 2005 compared to the first quarter of 2004.

      Selling, general and administrative expenses (SG&A) were 11.1% of total revenues for the three months ended March 31, 2005 compared to 10.7% in the same period of the prior year. Our SG&A ratio increased due to the effect of increases related to the CarePlus acquisition and premium taxes.

      Cash and investments totaled $603.1 million at March 31, 2005. A significant portion of this cash is regulated by state capital requirements. However, $168.1 million of our cash and investments was unregulated and held at the parent level.

      We expect acquisitions to continue to be an important part of our growth strategy. As of March 31, 2005, over 48% of our current membership has resulted from ten acquisitions. We are currently evaluating potential acquisition opportunities. We are also focused on growth opportunities in new markets and new products.

      On July 2, 2004, the State of Texas released a Request for Proposal (RFP) to re-procure its current Medicaid managed care programs, as well as to expand the current programs. Although the State has said it will announce contract awards in early 2005 with implementation continuing into 2006, the announcement of the awards may not occur until after the conclusion of the Texas legislative session on May 30, 2005. The RFP includes all of the current Texas service areas and products in which we operate. Our response to the RFP included our current Texas service areas and products as well as expansion into new service areas and products. If we lost one or more contracts through the re-procurement process, our operating results could be materially and adversely affected.

      We have an exclusive risk-sharing arrangement with Cook Children’s Health Care Network (CCHCN) and Cook Children’s Physician Network (CCPN), which includes Cook Children’s Medical Center (CCMC), that covers an estimated 129,000 AMERICAID members in Fort Worth, Texas. Of these members, approximately 110,000, or 85%, are children under the age of 15 who may utilize services of either CCPN or CCMC. Of this subset, approximately 23,000 are signed up with primary care physicians who are either employees of CCPN or exclusively contracted with CCPN. On February 25, 2005, we received a written notice from CCHCN and CCPN that the risk sharing agreement would not be extended beyond its

termination date of August 31, 2005. We believe that the notice of termination was given by CCHCN and CCPN in order to give them greater flexibility depending upon the outcome of the awards under the RFP.

      It is our intent to enter into a new contract with CCPN, CCMC and the CCPN physicians individually. However, there is no assurance that our contracting effort will be successful. In the event another Health Maintenance Organization (HMO) is awarded a contract in Fort Worth, CCPN may choose to contract with it, either on an exclusive or non-exclusive basis resulting in a possible loss of membership. We believe that CCHCN has filed a bid to contract with the State of Texas to provide Medicaid services in Fort Worth. In addition, if we are successful in re-contracting with CCHCN and/or CCPN the terms of any new contract may not be as favorable as the current risk-sharing arrangement. Therefore, our results from operations could be harmed.

      In April 2004, the Maryland Legislature enacted a budget for the 2005 fiscal year beginning July 1, 2004 that included a provision to reduce the premium paid to managed care organizations (MCOs) that did not meet certain HEDIS scores and whose medical loss ratio was below 84% for the calendar year ended December 31, 2002. In May 2004, the Maryland Secretary of Health and Mental Hygiene, in consultation with Maryland’s legislative leadership, determined our premium recoupment to be $846,000. A liability for the recoupment was recorded with a corresponding charge to premium revenue during the year ended December 31, 2004. Additionally, the Legislature directed that the Department of Health and Mental Hygiene complete a study by September 2004 on the relevance of the medical loss ratio threshold as an indicator of quality. The results of this study, which were released in October 2004, did not directly address what would happen in the future if an MCO reported a medical loss ratio below 84%. As a result, we believed the Maryland Legislature could enact similar legislation in 2005 as part of its fiscal year 2006 budget, requiring premium recoupment. Accordingly, we recorded a reduction in premium in our financial statements during the year ended December 31, 2004, which was our best estimate of the possible outcome of this issue.

      The Maryland Legislative Session ended on April 11, 2005 and it addressed the medical loss ratio assessment in the following manner. First, no budget action was taken to recoup premium relating to 2003 as it did in the 2004 legislative session. Second, the Legislature amended the existing statute to clarify the process and required that regulations be promulgated by the Department of Health and Mental Hygiene before an action could be taken to recoup premium based upon an MCO’s medical loss ratio. Based on this information, we reversed the reduction in premium that was previously recorded resulting in $6.1 million of additional premium revenue in the three months ended March 31, 2005.

      The following table sets forth the approximate number of our members we served in each state for the dates presented.

      The following table sets forth the approximate number of our members in each of our products on the dates presented.

      As of March 31, 2005, we served approximately 1,047,000 members, which reflects an increase of 180,000 members compared to March 31, 2004. The CarePlus acquisition effective January 1, 2005, added the New York market with 119,000 members as of March 31, 2005. The remaining same-store growth occurred in all of our markets, except Florida, due to new product offerings, new geographies, successful direct marketing initiatives, as well as competitors leaving the market. The Florida market decrease of 13,000 members is primarily a decrease in the SCHIP program, Florida Healthy Kids. This decrease is a direct result of changes made by the State of Florida during 2004 from a monthly enrollment to a semi-annual enrollment process and in the eligibility re-determination process, both of which have negatively impacted the statewide membership in the Florida Healthy Kids program. The Florida Legislature has passed legislation to change back the enrollment period from semi-annual to monthly which is pending the governor’s signature.

      On a sequential quarter basis, same-store membership grew by 10,000 members offset by a loss of 14,000 members primarily due to enrollment difficulties in the Florida Healthy Kids program as noted above as well as Medicaid eligibility processing issues in Texas. Texas statewide membership decreased due to a temporary interruption in the State’s ability to process new Medicaid applications. This interruption is a result of the State’s decision to outsource the eligibility determination process in 2005 causing employee turnover. The transition to the State’s outsourcing contract is expected to be completed in 2005. We can give no assurances that either the Florida legislative changes or the completion of the Texas eligibility outsourcing will have a positive impact on our membership growth.

Results of Operations

      The following table sets forth selected operating ratios. All ratios, with the exception of the HBR, are shown as a percentage of total revenues. We operate in one business segment with a single line of business.

Three Month Period Ended March 31, 2005 Compared to Three Month Period Ended March 31, 2004

      Premium revenue for the three months ended March 31, 2005 increased $131.6 million, or 31.2%, to $553.9 million from $422.3 million for the three months ended March 31, 2004. The increase was due to the CarePlus acquisition, internal growth in overall membership, premium rate increases and the reversal of the estimated Maryland premium recoupment previously recorded of $6.1 million. Total membership increased by 180,000, or 20.8%, to 1,047,000 as of March 31, 2005, from 867,000 as of March 31, 2004.

      Investment income and other increased $1.6 million to $3.6 million for the three months ended March 31, 2005 from $2.0 million for the three months ended March 31, 2004. The increase in investment income and other was due to favorable interest rates over the prior year.

      Expenses relating to health benefits for the three months ended March 31, 2005 increased $112.2 million, or 32.8%, to $454.4 million from $342.2 million for the three months ended March 31, 2004. This increase was primarily due to an increase in membership due to a combination of same-store growth as well as the CarePlus acquisition. Our HBR was 82.0% for the three months ended March 31, 2005, compared to 81.0% for the same period of the prior year. The increase in our HBR was due primarily to a higher incidence of flu seasonality reflected in pharmacy and physician services as well as less favorable prior period development in the comparative quarter offset by the resolution of the Maryland premium recoupment described above under the heading “— Overview.”

      Our SG&A to total revenue ratio was 11.1% and 10.7% for the three months ended March 31, 2005 and 2004, respectively. SG&A for the three months ended March 31, 2005 increased $16.5 million, or 36.3%, to $62.0 million from $45.5 million for the three months ended March 31, 2004. The increase in the SG&A ratio for the first three months of 2005 compared to the same period in 2004 is primarily a result of the CarePlus acquisition and an increase in the premium tax effect on the SG&A ratio offset by the benefit of the Maryland premium recoupment and improved efficiencies in SG&A.

      Interest expense was $0.2 million for each of the three months ended March 31, 2005 and 2004.

      Income tax expense for the three months ended March 31, 2005 was $13.4 million with an effective tax rate of 39.5% compared to $12.3 million for the three months ended March 31, 2004 with an effective tax rate of 40.1%. The decrease in the effective tax rate for the period is primarily due to a decrease in non-deductible expenses.

      Our primary sources of liquidity are cash and cash equivalents, short and long-term investments, cash flows from operations and borrowings under our Amended and Restated Credit Agreement (Credit Agreement). As of March 31, 2005, we had cash and cash equivalents of $289.5 million, short and long-term investments of $261.6 million and restricted investments on deposit for licensure of $52.0 million. A significant portion of this cash and investments is regulated by state capital requirements. Unregulated cash and investments as of March 31, 2005 were approximately $168.1 million. As of March 31, 2005, there were no borrowings outstanding under our $95.0 million Credit Agreement.

      On October 22, 2003, we entered into a $95.0 million Credit Agreement with a syndicate of banks. The Credit Agreement contains a provision which allows us to obtain, subject to certain conditions, an increase in

revolving commitments of up to an additional $30.0 million. The proceeds of the Credit Agreement are available for general corporate purposes, including, without limitation, permitted acquisitions of businesses, assets and technologies. The borrowings under the Credit Agreement will accrue interest at one of the following rates, at our option: Eurodollar plus the applicable margin or an alternate base rate plus the applicable margin. The applicable margin for Eurodollar borrowings is between 2.00% and 2.50% and the applicable margin for alternate base rate borrowings is between 1.00% and 1.50%. The applicable margin will vary depending on our leverage ratio. The Credit Agreement is secured by substantially all of the assets of AMERIGROUP Corporation and its wholly-owned subsidiary, PHP Holdings, Inc., including the stock of their respective wholly-owned managed care subsidiaries. There is a commitment fee on the unused portion of the Credit Agreement that ranges from 0.375% to 0.50%, depending on the leverage ratio. The Credit Agreement terminates on October 22, 2006 and was undrawn as of December 31, 2004.

      We are currently in the process of amending our Credit Agreement (the “Amended Credit Agreement”), to, among other things, increase commitments to $150.0 million and extend the term for an additional five years from the date of the amendment. We anticipate that the Amended Credit Agreement will be effective during the second quarter of 2005.

      Our subsidiaries are required to maintain minimum statutory capital requirements prescribed by various jurisdictions, including the departments of insurance in each of the states in which we operate. As of March 31, 2005, our subsidiaries were in compliance with all minimum statutory capital requirements. We believe that we will continue to be in compliance with these requirements for the next 12 months.

      On March 11, 2005, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission covering the issuance of up to $400.0 million of securities including common stock, preferred stock depositary shares debt securities, warrants, stock purchase contracts and stock purchase units. No securities have been issued under the shelf registration. Upon effectiveness of the shelf registration, we may publicly offer securities from time-to-time at prices and terms to be determined at the time of the offering.

      Effective January 1, 2005, we completed our stock acquisition of CarePlus in New York City, pursuant to the terms of the merger agreement entered into on October 26, 2004 for $126.8 million in cash, including acquisition costs. This acquisition was accounted for under the purchase method of accounting and was funded with unregulated cash. Goodwill and other intangibles total $114.2 million which includes $14.0 million of specifically identifiable intangibles allocated to the rights to membership, the provider network, non-compete agreements and trademarks.

      Cash provided by operating activities was $43.7 million for the three months ended March 31, 2005, compared to $0.1 million for the three months ended March 31, 2004. The increase in cash from operations of $43.6 million was primarily due to the following:

      Increases in cash flows due to:

      Offset by decreases in cash flows due to:

      For the three months ended March 31, 2005, cash provided by investing activities was $13.8 million and cash used in investing activities was $11.3 million for the three months ended March 31, 2004. The increase in

cash provided by investing activities related primarily to an increase in net investment proceeds in excess of purchases of $125.1 million offset by the purchase of CarePlus net of the cash acquired of $99.0 million. We currently anticipate total capital expenditures of approximately $26.0 to $28.0 million in 2005.

      Our investment policies are designed to preserve capital, provide liquidity and maximize total return on invested assets. As of March 31, 2005, our investment portfolio consisted primarily of fixed-income securities. The weighted average maturity is slightly under nine months. We utilize investment vehicles such as commercial paper, money market funds, municipal bonds, U.S. government agency securities, auction-rate securities and U.S. Treasury instruments. The states in which we operate prescribe the types of instruments in which our subsidiaries may invest their cash. The weighted average taxable equivalent yield on consolidated investments as of March 31, 2005 was approximately 2.41%.

      Cash provided by financing activities was $5.0 million for the three months ended March 31, 2005 compared to cash used in financing activities of $0.6 million for the three months ended March 31, 2004. The increase primarily related to a reduction in bank overdrafts and an increase in proceeds from the exercise of employee stock options.

      We believe that existing cash and investment balances, internally generated funds and available funds under our credit facility will be sufficient to support continuing operations, capital expenditures and our growth strategy for at least 12 months.

Regulatory Capital and Dividend Restrictions

      Our operations are conducted through our wholly-owned subsidiaries, which include HMOs and one managed care organization (MCO). HMOs and MCOs are subject to state regulations that, among other things, may require the maintenance of minimum levels of statutory capital, as defined by each state, and restrict the timing, payment and amount of dividends and other distributions that may be paid to their stockholders. Additionally, state regulatory agencies may require individual HMOs to maintain statutory capital levels higher than the state regulations. We believe our subsidiaries are in compliance with all minimum statutory capital requirements.

      As of March 31, 2005 we had short-term investments of $48.2 million, long-term investments of $213.4 million and investments on deposit for licensure of $52.0 million. These investments consist primarily of investments with maturities between three and twenty-four months. These investments are subject to interest rate risk and will decrease in value if market rates increase. Credit risk is managed by investing in commercial paper, money market funds, municipal bonds, U.S. government agency securities, auction-rate securities and U.S. Treasury instruments. Our investment policies are subject to revision based upon market conditions and our cash flow and tax strategies, among other factors. We have the ability to hold these investments to maturity, and as a result, we would expect any decrease in the value of these investments resulting from any decrease in changes in market interest rates to be temporary. As of March 31, 2005, a hypothetical 1% change in interest rates would result in an approximate $3.1 million change in our annual investment income.

      (a) Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management,

including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

      (b) Changes in Internal Controls over Financial Reporting. During the first quarter of 2005, in connection with our evaluation of internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, we concluded there were no changes in our internal control procedures that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

      In 2002, Cleveland A. Tyson, a former employee of AMERIGROUP Illinois, Inc., filed a federal Qui Tam or whistleblower action against our Illinois subsidiary. The complaint is captioned the United States of America and the State of Illinois, ex rel., Cleveland A. Tyson v. AMERIGROUP Illinois, Inc. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division. The complaint alleges that Amerigroup Illinois, Inc. submitted false claims under the Medicaid program. The United States has not sought to intervene in the case. Mr. Tyson’s amended complaint was unsealed and served on AMERIGROUP Illinois, Inc. in June 2003. Therein, Mr. Tyson alleges that AMERIGROUP Illinois, Inc. maintained a scheme to discourage or avoid the enrollment into the health plan of pregnant women and other Medicaid recipients with special needs. In his suit, Mr. Tyson seeks an unspecified amount of damages and statutory penalties of no less than $5,000 and no more than $11,000 per violation. Mr. Tyson’s complaint does not specify the number of alleged violations. The court denied AMERIGROUP Illinois, Inc.’s motion to dismiss on September 26, 2004. AMERIGROUP Illinois, Inc. filed a motion for summary judgment in December 2004 and it is pending before the court. On February 15, 2005, we received the motion filed by the State of Illinois on February 10, 2005, seeking court approval to intervene. On March 2, 2005, the court granted the State’s motion to intervene. On March 3, 2005, AMERIGROUP Illinois, Inc. filed a motion to dismiss for lack of subject matter jurisdiction, based upon a recent opinion of the United States Court of Appeals for the District of Columbia Circuit. That motion is pending disposition by the court. On March 3, 2005, the Office of the Attorney General of the State of Illinois issued a subpoena to AMERIGROUP Corporation as part of an investigation pursuant to the Illinois Whistleblower Reward and Protection Act to determine whether a violation of the Act has occurred. AMERIGROUP Corporation has filed a motion objecting to the subpoena on the grounds, among other things, that the subpoena is duplicative of one previously served on AMERIGROUP Corporation in the federal court Tyson litigation with which AMERIGROUP Corporation is complying.

      At this time, discovery is ongoing and no trial date has been set. Although it is possible that the outcome of this case will not be favorable to us, no range of liability can be estimated. Accordingly, we have not recorded any liability at March 31, 2005. There can be no assurance that the ultimate outcome of this matter will not have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

      We are from time-to-time the subject of, or involved in, other legal proceedings including claims for reimbursement by providers. We believe that any liability or loss resulting from such other legal matters will not have a material adverse effect on our financial position or results of operations.

      None.

      None.

      None.

      None.

Item 6.

Signatures

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 6, 2005

Date: May 6, 2005

Exhibits