About: Healius Limited (HLS, formerly Primary Health Care Limited) is a healthcare company providing service to medical and health professionals through its network of medical centres and pathology centres across Australia. HLS is also a provider of healthcare technology solutions to medical practitioners, medical practices and hospitals.

Why it’s in the portfolio: Healthcare is becoming a central pillar of bipartisan support in the Australian political landscape. Both the Liberal and Labour party’s have committed to increasing funding for diagnostic imaging (DI) and general practitioners (GPs). Each party is either matching the other party's policy commitments or providing additional funding measures in primary care. Undoubtedly, there is growing recognition that primary care remains a critical pathway in the early diagnosis and prevention of chronic disease. The primary healthcare providers Healius Ltd (HLS) and Sonic Healthcare (SHL) are well placed to be beneficiaries of this expanded opportunity.  We added Healius to the portfolio as it is in the early stages of an operational turnaround in its general practice, diagnostic imaging and pathology businesses. HLS offers direct exposure to the growing theme of primary care at a time when its valuation remains undemanding.

Fundamentals: HLS has a market cap of around $2bn, currently trading on a PE of 650x and a PB of 1x.

What could go wrong? Slower than expected growth in the health care sector potentially due to a shift in Australian political attention. Competition is also another factor that may hinder growth as other firms enter the market. Such stocks can also be quite interest rate sensitive as analysts use expectations of future interest rates to calculate the present value of earnings in the future - the larger the cash flows and the longer into the future, the greater the impact of a small rise in expected rates. And of course the company's tech could prove to be not as differentiated as it seems right now.