Amerigroup (AGP) narrowed its third-quarter profit but still trumped Wall Street forecasts, as higher health benefits expenses could not wholly offset increased membership and sales.

The Virginia Beach, Va.-based provider of healthcare to patients in publicly-funded programs such as Medicaid, Medicare and the Children’s Health Insurance Program, said it earned $48.1 million, or 96 cents a share.

The results, which are down compared with $84.3 million, or $1.68 a share, in the same quarter last year, were ahead of average analyst estimates polled by Thomson Reuters of 67 cents.

Revenue for the three-month period was up 7.4% to $1.6 billion from $1.49 billion a year ago, trumping the Street’s view of $1.57.

The sales growth was led largely by increased membership, up by 15,000 members, and expanded covered services in New Jersey. Those gains were offset by higher health benefits expense, which was 83.9% of revenue compared with 80.5% of revenue in the year-earlier period.

“We are pleased with our performance in the quarter where we expanded our membership, delivered solid earnings and produced strong cash flow," the company’s CEO James Carlson said in a statement.

The chief executive noted the company is on track to accomplish its goals for this year and is preparing for “significant growth in 2012 and beyond.”

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