BANGALORE (Reuters) - Health insurer Amerigroup Corp AGP.N posted a lower-than-expected quarterly profit hurt by a premium adjustment in Georgia caused by anomalies in the monthly membership records, wiping out almost a quarter of the company’s value.
“Expectations were high for Amerigroup heading into second quarter and investors expected the company to beat, which leads us to believe shares of Amerigroup could come under material selling pressure today,” Susquehanna Financial Group analyst Chris Rigg said.
The company’s second-quarter results were hurt by a one-time premium adjustment in Georgia of 16 cents.
The company recently identified anomalies in the Georgia monthly membership files, indicating that the State’s member records were not updated causing duplicate premium payments for the same member.
“Amerigroup’s second-quarter EPS, excluding the Georgia charge, would have been $0.99 and still well below Street expectations,” Rigg said.
Oppenheimer & Co analyst Michael Wiederhorn attributed Amerigroup’s earnings miss to higher-than-expected health-benefits ratio and selling, general and administrative expenses.
“While the Street might be disappointed with these results, we continue to believe the future remains bright for Amerigroup due to a strong growth outlook,” Wiederhorn said.
For the second quarter, the company reported a net income of $44.3 million, or 83 cents a share, compared with $67.2 million, or $1.31 a share, a year ago.
Total revenue, earned mostly from premiums, rose 6 percent to $1.53 billion.
Analysts, on average, expected earnings of $1.12 a share, excluding special items, on revenue of $1.56 billion, according to Thomson Reuters I/B/E/S.
Shares of Amerigroup were down 18 percent at $55 in morning trade on Friday on the New York Stock Exchange. They earlier touched a low of $50.55.
Reporting by Anand Basu in Bangalore; Editing by Sriraj Kalluvila