Centene Results Were Terrible. The Stock Has Turned a Big Loss Into a Gain.

Health insurer Centene reported its second-quarter earnings on Friday. (Dreamstime)

Centene stock was rising on Friday, even after ballooning medical costs led the health insurer to report a surprise quarterly loss.

Shares were down about 10% in premarket trading, but reversed course and climbed 2.2% after the opening bell. The S&P 500 was up 0.2%.

The selloff came after Centene reported a second-quarter adjusted loss of 16 cents a share, even as revenue jumped 22% from a year ago to $48.7 billion. Analysts were expecting a profit of 11 cents a share on revenue of $44.1 billion, according to a FactSet poll.

The company’s health benefits ratio, which tracks the proportion of its premiums it pays out to cover medical expenses, surged to 93% from 87.6% a year ago. The higher that figure is, the higher a health insurer’s costs are.

Analysts were expecting Centene to report a health benefits ratio of 91.3%.

Investors may simply be betting that things can’t get any worse. The stock has been cut in half since Centene pulled its financial guidance earlier this month, citing weak data it had seen on the insurance plans it sells on the Affordable Care Act exchanges. Some may see the earnings report as a dip-buying opportunity, even though it’s hard to find much to like.

The company’s earnings come just a day after fellow health insurer UnitedHealth Group said it was “complying with formal criminal and civil requests” from the Department of Justice, which sparked a selloff in UnitedHealth shares.

Write to George Glover at george.glover@dowjones.com