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 FILES UPDATED FORM 10 WITH THE SECURITIES AND EXCHANGE COMMISSION

Revises Diluted Share Count and Diluted EPS Data for Fiscal 2004 Three and Nine Month Periods

Culver City, CA— September 14, 2004— Prospect Medical Holdings, Inc. (PMHX.PK),("Prospect Medical"), a managed care management company serving 12 affiliated Independent Physician Associations ("IPAs") in Southern California, today announced that it has updated its Form 10 Registration Statement with the Securities and Exchange Commission ("SEC") in response to initial comments received from the SEC.

In connection with this updated filing, the Company is also providing revised diluted weighted average common and common equivalent shares outstanding ("diluted shares outstanding") data for the fiscal 2004 three- and nine-month periods ended June 30, 2004 and revised diluted earnings per share data for these periods. These results were originally published in a press release dated August 13, 2004.

Dr. Jack Terner, Chairman and Chief Executive Officer of Prospect Medical, commented, "It is important to note that fiscal 2004 third quarter net income of $1.6 million (up 466% from the prior year period) and fiscal 2004 nine-month net income of $4.2 million (up 583% from the prior year period) are unchanged, as are basic earnings per share for these periods. Prospect Medical remains on plan both operationally and as it relates to obtaining a national listing. Regarding the latter, the filing of the updated Form 10 is an important step in this process."

Revised Condensed Consolidated Income Statements are attached.

FORM 10 FILING

As previously announced, the Company is filing its Form 10 with the SEC for the purposes of registering its common stock under the Securities Exchange Act of 1934 and to seek a listing of its common stock on the American Stock Exchange ("AMEX"). A copy of the updated Form 10 filing, dated August 27, 2004, is available at http://www.prospectmedicalholdings.com/docs/prospect10A2.htm and at http://www.sec.gov The Form 10 will not become effective until the SEC completes its review of the filing and any further amendments to the Form 10 that the Company may be required to file. In addition, the Form 10 will not become effective until the AMEX certifies to the SEC that it has accepted the Company¹s common stock for listing on that exchange. There is no assurance that the Company will be able to have an AMEX listing approved.

Upon the effectiveness of its Form 10 Registration Statement, the Company will become a reporting issuer under the Exchange Act and will be required to file annual and quarterly reports on Forms 10-K and 10-Q and proxy materials in connection with meetings of shareholders. As a reporting issuer, the Company and its management will also become subject to the provisions of the Sarbanes-Oxley Act of 2002.

ABOUT THE COMPANY

Prospect Medical Holdings, Inc. is a health care management services organization that provides management services primarily to affiliated independent physician associations ("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.

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 and any subsequently filed reports. 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 Income Statements (Unaudited)