For more information, please contact either listing below:

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 2007 FIRST QUARTER RESULTS

Culver City, CA— February 14, 2007— Prospect Medical Holdings, Inc. (AMEX: PZZ), ("Prospect"), which manages the medical care of approximately 171,000 HMO enrollees in Southern California, today announced financial results for its fiscal 2007 first quarter, ended December 31, 2006 (see attached tables).

Dr. Jack Terner, Chairman and Chief Executive Officer of Prospect, commented, "Higher revenues for the first quarter of fiscal 2007, as compared to the same period one year ago, were primarily the result of including our November 1, 2005 acquisition of Genesis Healthcare of Southern California ("Genesis") for the full three months of the fiscal 2007 quarter, versus two months in the fiscal 2006 period. Also noteworthy, is our improving mix of Senior business. While most of the lives cared for by Prospect are commercial lives, most of our profits are generated by our Senior enrollees. We believe that it is especially significant that, between December 31, 2005 and December 31, 2006, we increased our Senior enrollment from approximately 13,400 members to approximately 14,100 members. This trend bodes well for us. We also continue to strengthen our balance sheet. As of December 31, 2006, Prospect's balance sheet included cash and investments totaling $14.2 million, and shareholders' equity of $34.9 million, or $4.14 per diluted share."

Dr. Terner continued, "Last quarter, we announced plans to significantly increase our focus on, and investment in, organic growth initiatives targeting Senior enrollment and profitability. Our investments in these initiatives began in earnest during the first quarter of fiscal 2007. These included a number of upgrades to our network of primary care and specialist physicians, addition of both contracted and employed hospitalists to help optimize hospital lengths of stay and profitability, contracted and internal resources devoted to accumulating and submitting member health data to Medicare in order to secure appropriate incremental Risk Adjustment revenues, and marketing personnel and expenses. These initiatives will continue as 2007 progresses. While the associated expenses will impact our profitability in the short term, including this first quarter, we continue to believe that these investments will position Prospect to capitalize on the very significant opportunities presenting themselves in our industry. Prospect's increased focus on organic growth does not signal a move away from acquisition-driven expansion, especially where there are compelling pricing and organizational synergies present. In addition to the initiatives described above, we are taking actions to further strengthen all aspects of our organization in anticipation of significant acquisition activity in 2007. We are in advanced discussions with several potential acquisition targets that could, if consummated, have a transforming effect on our business, in terms of scale, geographic expansion and hospital partnering. We hope to close at least one accretive transaction during calendar year 2007."

FISCAL 2007 FIRST QUARTER

Revenues for the first quarter of fiscal 2007 increased to $34.8 million from $33.5 million in the same period last year. Higher revenues were due primarily to inclusion of the results of Genesis for three months in the fiscal 2007 quarter, as compared to only two months in the fiscal 2006 quarter.

Gross margin for the first quarter of fiscal 2007 was $8.8 million, or 25.2% of revenues, compared to $9.0 million, or 26.8% of revenues, in the same period last year. Lower gross margin related primarily to increased claims expense, due to higher rates being paid for upgrading certain key specialists seeing our Senior and Commercial members, a switch from capitation to fee-for-service on certain key specialties, supplemental physician incentive payments to promote increased Senior member office visits, and additional IBNR reserves to provide for these increasing claims cost trends and for claims related to prior periods. This increased claims expense was partially offset by decreases in all other cost of revenue categories, including primary care physician capitation, specialist capitation and physician salaries.

Higher general and administrative expenses for the fiscal 2007 first quarter were due primarily to expenditures associated with the organic growth initiatives described above, including Prospect's employed hospitalist program, personnel upgrades to accommodate anticipated acquisitions, taking over management of the Genesis operation in October 2006, and expanded Senior marketing programs.

Joint venture income for the first quarter of fiscal 2007 declined slightly, due to proportionately higher hospital risk pool expenses in fiscal 2007. This joint venture income largely represents Prospect's participation in Orange County's OneCare program, a managed care program for individuals who qualify for both Medicare and Medi-Cal benefits ("Medi-Medis").

Operating income for the fiscal 2007 first quarter declined to $587,000, from $1.9 million in the same period last year, due to the combined impact of factors discussed above.

Prospect's effective tax rate was 40.1% in the first quarter of fiscal 2007, as compared to 40.3% in the comparable period last year, in line with expectations.

Net income for the first quarter of fiscal 2007 was $334,000, or $0.04 per diluted share, on approximately 8.4 million diluted shares outstanding, as compared to net income of $1.1 million, or $0.14 per diluted share, in the fiscal 2006 first quarter, on approximately 7.8 million shares outstanding.

CONFERENCE CALL

Dr. Jack Terner, Chairman and Chief Executive Officer, Catherine Dickson, President and Chief Operating Officer and Mike Heather, Chief Financial Officer, will host a conference call on February 14, 2007 at 4:30 p.m. ET to discuss this news release. Interested parties may participate in the call by dialing (866) 820-1713 (Domestic) or (706) 643-3137 (International) approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Prospect Medical conference call. In addition, the conference call will be broadcast live over the Internet at http://audioevent.mshow.com/323153/. To listen to the live call on the Internet, go to the web site at least 15 minutes early to register, download and install any necessary audio software. If you are unable to participate in the live call, the conference call will be archived and can be accessed for approximately 90 days.

ABOUT THE COMPANY

Prospect Medical Holdings manages the medical care of individuals enrolled in HMO plans in Southern California. The Company, through its Independent Physician Associations ("IPAs"), contracts with health care professionals to provide a full range of services to HMO enrollees. Prospect does not acquire bricks and mortar, but rather the medical management of the lives serviced by the acquired IPAs. Services provided by Prospect include contract negotiations, physician recruiting and credentialing, HR, claims administration, financial services, provider relations, case management, quality assurance, data collection and MIS. Prospect's 11 affiliated IPAs at December 31, 2006 were comprised of approximately 9,000 primary care and specialist physicians serving approximately 171,000 HMO members.

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 28, 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