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Health insurer Humana misses Street 3rd quarter forecasts, tightens 2014 guidance

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LOUISVILLE, Kentucky — Humana's third-quarter earnings fell well short of Wall Street forecasts, and the health insurer moved its 2014 outlook further away from the average analyst prediction, but it expects growth next year.

Shares of the Louisville, Kentucky company, slumped more than 5 percent in premarket trading Friday.

Humana said that it now expects adjusted earnings for 2014 to range between $7.40 and $7.60 per share. That's a tighter span than its previous forecast for $7.25 to $7.75 per share. Humana said it adjusted its forecast to reflect expected reductions in earnings volatility this year.

Analysts expect, on average, earnings of $7.76 for 2014, according to FactSet.

Humana is among the nation's largest providers of Medicare Advantage plans, which are privately run versions of the government's Medicare program for elderly and disabled people. Overall, the company's earnings fell 21 percent in the third quarter to $290 million, or $1.85 per share. That compares to $368 million, or $2.31 per share, in last year's quarter.

The average estimate of analysts surveyed by Zacks Investment Research was for earnings of $2.01 per share.

Humana attributed the earnings drop, in part, to investments in health care exchanges and higher specialty prescription drug costs.

Revenue excluding investment income jumped nearly 19 percent to $12.14 billion. Analysts expected $12.32 billion.

"It wasn't a good quarter from Humana, and the 2015 outlook will likely be seen as disappointing," Citi analyst Carl McDonald said in a research note.

For 2015, Humana forecasts earnings of between $8.50 and $9 per share.

Analysts expect $8.83 per share, according to FactSet.

Humana Inc.'s stock fell $7.87, or 5.6 percent to $132 in premarket trading Friday an hour before the market opening. Company shares had climbed 36 percent since the beginning of the year, as of Thursday's close. That more than triples the growth of the Standard & Poor's 500 index.

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Elements of this story were generated by Automated Insights using data from Zacks Investment Research. HUM stock research report from Zacks.

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Keywords:Humana,Earnings Report

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