Selling, general and administrative expenses were 8.6% of total revenues for the first quarter of 2010, versus 9.0% in the first quarter of 2009, and compared to 7.7% for the fourth quarter of 2009.  

While core selling, general and administrative expenses remained stable and at expected levels, the SG&A ratio increased sequentially due to variable compensation accruals in the current quarter that are correlated with earnings performance.  

Premium Taxes

First quarter premium taxes were $31.5 million versus $28.1 million for the first quarter of 2009, and compared to $33.2 million in the fourth quarter of 2009.  

Net Income

Net income for the first quarter of 2010 was $42.2 million, or $0.82 per diluted share, versus $40.2 million, or $0.79 per diluted share, for the fourth quarter of 2009.  

Balance Sheet Highlights

Cash and investments at March 31, 2010 totaled $1.4 billion, of which $257.4 million was unregulated, compared to $232.0 million of unregulated cash and investments in the fourth quarter of 2009. 

During the quarter, the Company repurchased approximately 251,000 shares of its common stock for approximately $7.0 million under the Company's ongoing stock repurchase program.  

The debt to total capital ratio decreased to 18.8% as of March 31, 2010, from 19.3%, as of December 31, 2009.

Medical claims payable as of March 31, 2010 totaled $549.2 million compared to $529.0 million, as of December 31, 2009.  Days in claims payable represented 43 days of health benefits expense, which is in-line with the expected range of 40 to 50 days, compared to 42 days in the previous quarter.  The sequential increase in days was primarily due to the timing of the normal weekly claims disbursement cycle.  

Included on page 10 is a table presenting the components of the change in medical claims payable for the three-month period ended March 31, 2010 and the twelve months ended December 31, 2009.

Cash Flow Highlights

Cash used in operations totaled $6.8 million for the three months ended March 31, 2010, compared to cash flow provided by operations of $36.1 million in the first quarter of 2009.  The key driver of the change between the two periods relates to the timing of premium payments, which impacted both unearned revenue and premium receivables.

Outlook  

At this time, the Company will continue its recent practice of not issuing annual earnings guidance.  Following a couple of years in which a dynamic business and external operating environment required frequent changes to its guidance, the Company believes it would be prudent to operate for a period of time without guidance.  Therefore, the Company does not intend to issue 2010 annual guidance.  It will evaluate the practice of issuing annual guidance and will communicate the plan for 2011 later in the year.

SOURCE Amerigroup Corporation