(RTTNews) - Health insurance company Amerigroup Corp. (AGP: News ) Friday reported a decline in profit for the third quarter, despite a rise in revenues, reflecting higher medical costs associated with the onset of flu season due to the H1N1 virus.

Net income for the third quarter declined to $22.55 million or $0.43 per share from $37.93 million or $0.71 per share in the previous year.

On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.45 per share for the quarter. Analysts estimates typically exclude special items.

The company noted that third quarter earnings were in line with the preliminary earnings range that the company issued on October 26, 2009.

Total revenues for the quarter rose to $1.304 billion from $1.098 billion a year ago. Analysts estimated revenue of $1.32 billion for the quarter.

Premium revenues increased 20.2% to $1.299 billion from $1.080 billion last year. Investment income and other revenues declined to $5.31 million from $17.62 million.

Total expenses increased to $1.269 billion from $1.036 billion in the comparable quarter last year. Health benefits expenses rose to $1.136 billion from $0.886 billion in the previous year. Health benefits expenses were 87.5% of premium revenues, much higher than 82.0% in the previous year.
The company attributed the higher expenses to the ongoing increases in outpatient medical costs related to emergency room services, ambulatory surgery and physician services. In addition to higher general trends in outpatient costs, the company believes that the health benefits ratio was elevated further in the third quarter due to a significant spike in flu-related activity that primarily impacted its Medicaid and CHIP members.

Third quarter premium taxes were $38.3 million, compared to $23.9 million last year.

For the nine-month period, net income was $109.06 million or $2.07 per share, compared to a loss of $92.47 million or $1.75 per share in the same period of the previous year. Total revenues for the period increased to $3.825 billion from $3.287 billion last year.

Earlier, on October 26, the company withdrew its annual earnings guidance for the current fiscal year, due to wide range of medical costs that may occur in the fourth quarter.

AGP is currently trading at $2.44, down 0.30 or 1.32%, on the NYSE.

To receive FREE breaking news email alerts for AMERIGROUP Corp and others in your portfolio

by RTT Staff Writer

For comments and feedback: contact editorial@rttnews.com