Health-care provider Healthways (NASDAQ:HWAY) gave itself a dose of good medicine when it announced its first international contract yesterday. The three-year deal will cover 50,000 patients with heart disease and respiratory ailments in Germany.

It was not an unexpected move. The managed-care provider had predicted that it would sign an international agreement before the end of the year, so it was more of a question of "when" rather than "if." Healthways' core business of lowering health-care costs for companies has been running strong, and last quarter's revenues increased 60% over the year-ago period.

International expansion will now be another component of the company's growth strategy. It has been investing heavily in its international operations, and now they may begin to pay off. With future overseas deals planned, rumor has it that Healthways may be an acquisition candidate.

The stock, which had sagged after several quarters of below-expectations results, has rebounded lately, even hitting new highs at the beginning of the month. Considering that the company has reduced its outlook because of its participation in a Medicare-sponsored trial program, those run-ups in stock price seem a bit speculative.

Yet perhaps a closer examination of what a negative outcome to the MHS program would mean is warranted. While Healthways, which is a Motley Fool Stock Advisor recommendation, is in negotiations with the agency to change the ground rules, there's no guarantee they'll be successful.

Under the Medicare Health Support (MHS) pilot program, Healthways is under contract to achieve an average of 5% improvement in cost-containment for the population over three years. The results thus far have not been encouraging -- parts of the population seem to be intractable to the interventions Healthways offers -- so while it has been negotiating with Medicare, it also finally warned investors that its previous rosy outlook couldn't be counted on.

A number of insurers are also participating in the pilot program, including Aetna (NYSE:AET) and Cigna (NYSE:CI). A few lesser names, like LifeMasters, pulled out of the project when they realized that they couldn't achieve the cost savings required. Healthways had been in talks to acquire LifeMasters until it proved unable to make the goal, after which the negotiations fell through. And several studies over the years have found that the sort of disease management probed in the MHS program probably won't save money, though it will help the people being serviced.

Stacked against those findings are the tens of millions of dollars paid to the respective participants in expectation of saving Medicare money. Healthways has already reported some $1.9 million in net revenue reversals so far, and all the funds received are at risk if it fails. That's led me to question taking too large a stake in Healthways. A negative result will undoubtedly cause the stock to drop. There's too much of a question mark with the program to be able to invest confidently.

That said, the MHS program comprises only a very small part of Healthways' total revenues. Even if the total amount received had to be refunded, it wouldn't make much of a dent in its operations. The commercial side of Healthways' business continues to be strong, and with this latest international agreement, it has new geographies it can expand into.

While the MHS pilot program is now in question -- and has been dragging earnings down a bit -- there are too many positives in the rest of the business to swear Healthways off completely. I think the current price is too exuberant; fourth-quarter results will probably provide a more attractive entry point. We should also get a better idea of how the MHS program is going, and what the international scene looks like. I'd wait till then to inject Healthways into my portfolio.

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.