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UPDATE 1-Humana says 2014 to include spending on exchanges, Medicaid

Wednesday, 6 Nov 2013 | 6:55 AM ET

Nov 6 (Reuters) - U.S. health insurer Humana Inc on Wednesday said it expected earnings to decline next year because of spending on the new health exchanges and on the Medicaid program for the poor.

Humana and its competitors began selling insurance plans to individuals on Oct. 1 on state-based exchanges created under the national healthcare reform law. Those plans take effect in 2014.

The company also has managed care contracts with some states for their Medicaid health plans.

Humana said it expected 2014 earnings of $7.25 to $7.75 per share, including 50 cents to 90 cents in Medicaid and health exchange costs.

Analysts on average were expecting a profit of $8.69 per share for the year, according to Thomson Reuters I/B/E/S. It was not immediately clear if that consensus figure included any spending on those investments.

Humana forecast revenue of $43 billion, in line with analysts' expectations.

For 2013, the company said it continued to expect earnings of $8.65 to $8.75 per share.

Third-quarter net income fell to $368 million, or $2.31 per share, from $426 million, or $2.62 per share, a year earlier. Revenue rose during the quarter, but the company paid out more in claims.

The earnings beat analysts' expectations of $2.15 per share.

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