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Prospect Medical Holdings, Inc.
Linda Hodges,
Executive Vice President
(310) 337.4170
linda.hodges@prospectmedical.com

Investor Relations Counsel:
The Equity Group Inc.
Devin Sullivan
(212) 836-9608
dsullivan@equityny.com

FOR IMMEDIATE RELEASE

PROSPECT MEDICAL HOLDINGS REPORTS FISCAL 2006 FIRST QUARTER RESULTS

Q1 FY 2006 Highlights:

• Revenues reach $33.5 million
• Gross margin improves to 26.8%
• Net income of $1.1 million, or $0.14 per diluted share

Culver City, CA— February 14, 2006— Prospect Medical Holdings, Inc. (AMEX: PZZ), ("Prospect"), which manages the medical care of individuals enrolled in managed care (HMO) plans in southern California, today announced financial results for its fiscal 2006 first quarter ended December 31, 2005 (see attached tables).

Total operating revenues for the first quarter of fiscal 2006 rose to $33.5 million from $33.3 million in the same period last year, primarily reflecting the acquisition of Genesis Healthcare of Southern California ("Genesis") and higher capitation rates on Prospect's core business (exclusive of acquisitions), offset by a decline in enrollees.

Gross margin for the first quarter of fiscal 2006 improved to 26.8% from 25.5% in the first quarter of fiscal 2005. This increase was due to an improved medical loss ratio, the result of decreased capitation expenses, offset by higher claims expense and an increase in physician compensation and other cost of sales.

Operating income of $1.9 million reflected a $558,000 increase in general and administrative expenses, which was comprised of higher salaries and benefits, and higher management fees related to the Genesis acquisition, as well as an $89,000 rise in depreciation and amortization. These higher costs were offset by a $105,000 increase in income from an unconsolidated joint venture during the first quarter of fiscal 2006.

Net income for the first quarter fiscal of 2006 was $1.1 million, or $0.14 per diluted share, on approximately 7.8 million diluted shares outstanding ("shares outstanding"), compared to net income of $1.1 million, or $0.13 per diluted share, in the first quarter of fiscal 2005, on approximately 8.7 million shares outstanding.

Dr. Jack Terner, Chairman and Chief Executive Officer of Prospect, commented, "We are pleased with our results for the first quarter, which included increased net income compared to both the first quarter of fiscal 2005 and the fourth quarter of fiscal 2005. This improved profitability was achieved despite the higher costs associated with acquisitions and infrastructure upgrades. During the first quarter of 2006, we acquired Genesis and are very pleased with the progress of our integration efforts. As a complement to our acquisition strategy, we are also developing and implementing organic growth initiatives focused on senior enrollees. As previously announced, Prospect has been approved to participate in Orange County's One Care program, which is a managed care program for the approximately 50,000 individuals who qualify for both Medicare and Medi-Cal benefits ("Medi-Medis"). In January 2006, Prospect began realizing revenue from those Medi-Medis choosing, or assigned to, our contracted physicians. Through our investment in Brotman Medical Center, we are offering a full-risk Medicare hospital product to the large West Los Angeles market. In addition, we continue to allocate resources for the capture of CMS risk adjustment dollars reflecting Prospect's care of sicker seniors."

He concluded, "Prospect is one of the ten largest IPA management companies in southern California, with approximately 9,000 primary care and specialist physicians under contract serving approximately 184,400 HMO enrollees. California's mature and highly fragmented managed care market is ripe for consolidation. In that regard, we are in discussions with several potential acquisition targets that would further strengthen our presence in southern California, and expect to consummate at least one additional transaction during fiscal 2006. With a proven operating model, solid industry relationships, and increasing revenues and profits, we believe that we are well positioned for continued growth."

FINANCIAL POSITION

Prospect's balance sheet at December 31, 2005 included cash and investments of $13.4 million and shareholders' equity of $28.7 million, or $3.70 per diluted share. Prospect had $11.6 million outstanding on its term facilities, and had not utilized any portion of its $5 million revolving credit facility.

ABOUT THE COMPANY

Prospect Medical Holdings, Inc. is a health care management services organization that provides management services primarily to its affiliated IPAs. IPAs are professional corporations that contract with independent physicians and other health care providers to create a medical panel of primary care and specialist physicians, and other health care service providers, capable of providing the full range of medical services to individuals enrolled in health maintenance organization ("HMO") managed care health plans. At December 31, 2005, Prospect's IPAs were comprised of approximately 9,000 primary care and specialist physicians serving approximately 184,400 HMO enrollees.

This press release contains forward-looking statements. Additional written or oral forward-looking statements may be made by the Company from time to time, in filings with the Securities and Exchange Commission, or otherwise. Statements contained herein that are not historical facts are forward-looking statements. Investors are cautioned that forward-looking statements, including the statements regarding anticipated or expected results, and the future introduction of new products, involve risks and uncertainties which may affect the Company's business and prospects, including those outlined in the Company's Form 10-K filed on December 27, 2005 and in the Form 10-Q filed on February 14, 2006. Any forward-looking statements contained in this press release represent our estimates only as of the date hereof, or as of such earlier dates as are indicated, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change.

Prospect Medical Holdings, Inc.
Condensed Consolidated Statements of Income
(unaudited)

Prospect Medical Holdings, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)