UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the quarterly period ended June 30, 2005

or

®		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 1-32203

Prospect Medical Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		33-0564370
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6083 Bristol Parkway, Suite 100 Culver City, California		90230
(Address of principal executive offices)		(Zip Code)

(310) 338-8677

(Registrantís telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ®

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ® No x

The number of shares of the issuerís Common Stock, par value $0.01 per share, outstanding as of August 5 2005, was 6,640,374.

PROSPECT MEDICAL HOLDINGS, INC.

Index

		Page
	Part I ñ Financial Information
Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of June 30, 2005 (unaudited) and September 30, 2004	3

	Condensed Consolidated Statements of Income for the three-month and nine-month periods ended June 30, 2005 and 2004 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the nine-month periods ended June 30, 2005 and 2004 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Managementís Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	24

	Part II ñ Other Information

Item 1.	Legal Proceedings	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Submission of Matters to a Vote of Security Holders	26

Item 5.	Other information	26

Item 6.	Exhibits	27

Signatures		28

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PROSPECT MEDICAL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	June 30 2005			September 30 2004
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	14,600,744		$	20,330,754
Investments	1,162,000			512,687
Risk pool receivables	ó			87,979
Other receivables, net of allowances of $736,000 and $662,000 at June 30, 2005 and September 30, 2004	903,574			1,122,864
Notes receivable, current portion	51,559			281,064
Prepaid expenses and other	816,584			607,077
Refundable income taxes	888,372			ó
Deferred income taxes, net	1,549,381			1,605,478
Total current assets	19,972,214			24,547,903

Property, improvements and equipment:
Land	40,620			40,620
Leasehold improvements	726,973			714,619
Equipment	3,490,471			3,291,307
Furniture and fixtures	517,759			536,869
	4,775,823			4,583,415
Less accumulated depreciation and amortization	(3,447,732		)	(2,977,411		)
Property, improvements and equipment, net	1,328,091			1,606,004

Notes receivable, long term portion	582,084			617,545
Prepaid expenses and other, long term portion	1,151,592			102,958
Goodwill	31,369,532			31,461,303
Other intangible assets, net	1,459,867			1,952,291

Total assets	$	55,863,380		$	60,288,004

LIABILITIES AND SHAREHOLDERSí EQUITY
Current liabilities:
Accrued medical claims and other health care costs payable	$	12,566,103		$	13,323,622
Accounts payable and other accrued liabilities	6,533,947			7,523,808
Current maturities of long-term debt and capital leases	3,000,000