Amidst record levels of market volatility caused by the COVID-19 pandemic, one set of stocks that has performed extraordinarily well is made up of companies engaged in coronavirus testing. Take the example of Opko Health (OPK 1.54%), which runs BioReference, one of the nation's leading clinical laboratories.

Since the beginning of the year, shares of Opko Health have gone up by 280%. A modest investment of $2,000 in January would have grown to $7,606 in the span of seven months -- and the party is far from over. Opko Health is at a pivotal stage in its expansion efforts, which I believe will further enrich investors. Let's take a look as to why. 

Guard in PPE suit uses infrared thermometer to check someone's temperature.

Image source: Getty Images.

Pro sports testing 

In July, BioReference landed a contract with the NFL to test all 32 teams for COVID-19 as the season kicks off this August. The company will also be responsible for testing all of the NBA's players, referees, teams, and league staff for the deadly virus.

If that wasn't enough, BioReference has also signed a contract with the U.S. Centers for Disease Control and Prevention (CDC) to supply the organization with an indefinite supply of COVID-19 commercial tests for the coronavirus emergency response.

Even before the coronavirus, BioReference had a solid reputation stemming from its multiple testing contracts with federal, state, and local governments. As of now, BioReference is seeing up to 40,000 requisitions per day, with 11 million patients being administered its tests every year. The company also has the capacity to administer up to 50,000 COVID-19 pathogen tests per day and 400,000 COVID-19 antibody tests per day. BioReference accounts for 70% of Opko Health's revenue. 

Solid pipeline

The company's leading drug candidate is Somatrogon, a once-weekly hormone replacement therapy designed to induce growth in height. In phase 3 clinical studies partnered with Pfizer (PFE -0.97%), Somatrogon was able to beat the efficacy of the current standard-of-care drug, Genotropin. If Somatrogon replaces Genotropin, it will be able to capture a $498 million market based on Genotropin's 2019 sales. The company plans to file a Biologic License Application (BLA) for Somatrogon's approval with the U.S. Food and Drug Administration (FDA) later this year.

Momentum from existing products

Another drug in Opko Health's repertoire that's performing quite well is Rayaldee. Rayaldee is the only approved treatment for a thyroid disorder in patients with chronic kidney disease. In the first quarter of 2020, the drug's prescription count grew by a staggering 78% compared with the same period last year, bringing in $9.9 million in revenue.

Last year, the drug saw over 50,000 prescriptions in the U.S., and its sales will likely see continued momentum as it enters international markets. Opko Health has signed milestone agreements with distribution partners in Japan and Germany amounting to $949 million, with double-digit percentage royalties on sales of Rayaldee. 

What's the verdict?

Currently, Opko Health has $45.2 million in cash and investments, coupled with $213.8 million in convertible notes, making its debt levels somewhat manageable. That said, the company's financials do not look great at first glance. Opko Health's revenue decreased from $222.5 million in Q1 2019 to $211.4 million in Q1 2020. Its net loss did narrow to $59.1 million in the most recent quarter from $80.7 million during the same period last year.

However, I am inclined to believe shares of Opko Health are at a pivotal stage of a dramatic rally. First of all, the company's testing volume will increase significantly with its CDC, NFL, and NBA testing contracts. Second, Rayaldee prescriptions have increased even further thanks to its ability to address an unmet medical need and its anticipated approval by the European Medical Agency in the second half of 2020.

Finally, Somatrogon's ability to beat standard care in clinical studies is highly indicative of regulatory approval -- and again, this means a $498 million annual market. I believe Opko Health's price-to-sales ratio of 5 is a bit too cheap for the growth opportunities just over the horizon. Hence, I highly recommend that healthcare investors check out Opko Health as a great growth stock.