NEO: well they also needed more capital because the ending of the TC grandfather clause meant an increase in days outstanding on their collectibles.
One of my standard rules of investing is to try to invest in companies that have a tailwind behind them - it's a lot easier to make money in a sector with a tailwind.
With NEO, the position is quite unclear. On the one hand, there is a definite tailwind in terms of growing molecular testing for oncology indications and ongoing industry consolidation. On the other hand, there is also a definite headwind in terms of reimbursement getting tougher and thus revenue per test dropping. For the past few years they have had a moderate net headwind, but I find it hard to figure out what the next few years will bring.
Peter
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