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Having college and professional athletes play sports during a pandemic can create logistics problems with social distancing and COVID-19 testing. Two small cap companies have won contracts to help leagues with testing.
Opko Health: BioReference Laboratories, owned by Opko Health (NASDAQ: OPK), was the provider of COVID-19 tests for the NBA this summer when the league operated in a bubble.
The Associated Press reported that BioReference is working with the NBA for the 2020-2021 season as well. The Opko unit gets $140 per test and may get additional revenue from this partnership this season. The report said BioReference could have personnel traveling with teams to help with the testing.
WishTV also reports the league will offer voluntary testing for household members twice a week.
Opko reported third-quarter earnings in October. The company’s BioReference Laboratories unit saw COVID-19 test volume up 61% from the second quarter. The company processed more than 3.5 million tests in the quarter and has the capacity to process 70,000 per day.
Opko has signed COVID-19 tests deals with schools in New York, sports teams health care organizations and more than 600 drive-thru testing locations.
Third-quarter revenue was $428.1 million compared to $228.8 million in the prior year thanks to acquisitions. Fourth-quarter results expected in February could be worth watching for investors to see the impact the testing contracts have on revenue.
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PAE Incorporated: U.S. government contractor PAE Incorporated (NASDAQ: PAE) announced a deal with the SEC to provide COVID-19 testing services for winter and spring sports at 14 universities. This follows up the company landing a deal for fall sports for the league.
PAE reported revenue of $666.2 million in the third quarter, down 4.5% year-over-year, due to the impact of COVID-19.
The company relies heavily on government deals. The Department of State makes up 22% of revenue and the combination of the Air Force, Army and Navy make up another 34% of revenue.
The COVID-19 testing contract win with the SEC could help it diversify its business model and also lead to landing additional wins in the segment.
Price Action: Shares of Opko are up 205% year-to-date. Shares hit their 52 week high of $5.96 in July, around the time of the first NBA deal.
PAE shares are down 9% year-to-date.
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