Amerigroup Acquires 184,000 Members of Florida Medicaid Plan; Acquisition Expected to Be $0.25 to $0.30 Accretive to 2003 Eps.

Business Editors/Health & Medical Writers

VIRGINIA BEACH, VA--(BUSINESS WIRE)--Aug. 22, 2002

AMERIGROUP Corporation (Nasdaq:AMGP), today announced that it has entered into a definitive agreement to acquire PHP Holdings, Inc. and its subsidiary, Physicians Healthcare Plans, Inc. (together, PHP). PHP is a leading managed health care company focused on serving Medicaid and State Children's Health Insurance Program (SCHIP) recipients in Florida. Under the agreement, AMERIGROUP will serve all of PHP's Medicaid and SCHIP members and operate under the name AMERIGROUP Florida, Inc. As of August 1, 2002, PHP served approximately 184,000 such members. AMERIGROUP will not acquire PHP's CarePlus Health Plan, which will continue to serve its Medicare and commercial lines of business.

AMERIGROUP Florida will serve the needs of individuals receiving health care benefits under the state's Medicaid and Healthy Kids, or SCHIP, programs, in addition to Summit Care Plan, a pilot elder care program to help seniors live safely in their homes as an alternative to nursing home care. AMERIGROUP Florida will operate in 12 counties in central and south Florida, including the Miami/Ft. Lauderdale, Orlando and Tampa metropolitan areas.

"This transaction combines the strengths, resources and experience of two dynamic companies committed to serving low-income families and the uninsured. PHP has a reputation as a well-run and respected organization. It has an outstanding record of customer service and community involvement, and has demonstrated an ability to improve the health status of its members and control costs," said Jeffrey L. McWaters, chairman and CEO of AMERIGROUP Corporation. "We look forward to partnering with the State of Florida to further improve access to care and services, control escalating health care costs and reduce the number of uninsured."

"This transaction will be our eighth acquisition. With our expansion into Florida, we will serve ten markets in six states. As we enter Florida, our concentration of market risk continues to diminish," McWaters added.

AMERIGROUP will pay approximately $121 million for the acquisition. It is anticipated that approximately $60 million of the purchase price will be financed through AMERIGROUP's existing credit facility with the balance funded through available unrestricted cash. Subject to receipt of regulatory approvals, the transaction is expected to become effective in the first quarter of 2003.

The acquisition is expected to be immediately accretive to earnings by approximately $0.25 to $0.30 per share in 2003 and add nearly $300 million of annualized revenues.

AMERIGROUP is experiencing favorable operating trends in its core business, so 2002 expenses to ensure a smooth transition of this acquisition should not result in a change to previous 2002 earnings guidance. As a result, earnings per share for the full year of 2002 are expected to be at the lower end of the Company's previous guidance of $2.15 to $2.20.

"We are very pleased that our Medicaid line of business will be operated by a company that has demonstrated its commitment of quality service to providers and members, as well as an understanding of the unique cultural and special needs of the populations they serve," said Michael B. Fernandez, chairman and CEO of the Physicians Healthcare Plans and CarePlus Health Plan. "Over the past eight years, AMERIGROUP has demonstrated this commitment in every acquisition and new market it enters. Their exclusive focus on the Medicaid population will assure continued quality service to our members and providers."

AMERIGROUP senior management will discuss the transaction on a conference call, Thursday, August 22, at 2:00 p.m. Eastern Time. The conference can be accessed by dialing 1-800-585-9271. A recording of this conference call will be available from 4:00 p.m. Eastern Time on Thursday, August 22, until 6:00 p.m. Eastern Time on Thursday, August 29. To access the recording, dial 1-800-633-8284 and enter 20828807. A live webcast of the call also will be available at www.firstcallevents.com/service/ajwz364810824gf12.html or through the investor relations page on the AMERIGROUP web site at www.amerigroupcorp.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.

PHP Holdings, Inc., headquartered in Coral Gables, Florida, operates a series of managed care companies servicing the health care needs of Floridians. PHP currently covers in excess of 184,000 Medicaid and Healthy Kids members and approximately 40,000 Medicare members in Florida.

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 state-sponsored programs including Medicaid, SCHIP, and FamilyCare. The Company currently operates in Maryland, Texas, New Jersey, Illinois and the District of Columbia.

For more information on 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 acquired assets, closing dates, membership, revenues, transition expenses and earnings per share, 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 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 on March 12, 2002, 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.