UPDATE 1-Sepracor profit misses estimates as Xopenex falls

* Q3 EPS of 10 cents/share vs estimate of 13 cents/share

* Lunesta sales fall nearly 4 percent

* Sees full-year non-GAAP earnings of $1.27-$1.47/share

NEW YORK, Oct 28 (Reuters) - Sepracor Inc SEPR.O posted a sharp decline in third-quarter profit on Tuesday, missing Wall Street estimates, as lower reimbursement rates from Medicare hurt sales of its asthma drug Xopenex.

Net income fell to $19.4 million, or 17 cents a share, from $39.7 million, or 34 cents a share, a year ago.

Excluding one-time items, the company earned 10 cents a share, 3 cents below the average expectation of analysts, according to Reuters Estimates.

Revenue rose 9.6 percent to $307.7 million. Sales of its insomnia drug Lunesta slipped nearly 4 percent to $154.7 million. Combined sales of its Xopenex drugs fell 11 percent to $96.4 million.

Sepracor has been hurt over the past year by of a reduction in the level of government reimbursement for Xopenex and increased competition to Lunesta.

The Marlborough, Massachusetts-based company forecast full-year earnings per share, excluding items, of $1.27 to $1.47 on revenue of $1.275 billion to $1.325 billion. In July it forecast revenue of $1.28 billion to $1.38 billion. (Reporting by Lewis Krauskopf and Toni Clarke; Editing by Steve Orlofsky)