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 TO REQUEST VOLUNTARY CONVERSION OF PREFERRED STOCK

Culver City, CA— February 10, 2005— Prospect Medical Holdings, Inc. (PMHX.PK),("Prospect Medical" or "the Company") today announced that it will request that the holders of its Series A Preferred Stock voluntarily convert some or all their preferred holdings into common shares of Prospect Medical. Prospect Medical expects to mail solicitation letters to the holders of its Series A Preferred Stock shortly.

This action is being taken so that Prospect Medical can comply with the American Stock Exchange¹s ("AMEX's") listing standard of 400 minimum common stock holders. Management believes that the Company complies with all other AMEX listing standards. The AMEX has advised the Company that, barring any unforeseen issues that may arise, it expects to approve the listing of Prospect Medical's common stock, subject to the Company obtaining the 400 minimum common stock holders and upon the effectiveness of the Company¹s Form 10 registration statement filed with the Securities and Exchange Commission ("SEC").

Currently, the Company has approximately 320 beneficial owners of its common stock and 175 holders of its Series A Preferred Stock, for a total of approximately 495 holders. Approximately 80 preferred stockholders would need to convert some of their preferred shares to common in order for Prospect Medical to meet the AMEX's minimum stockholder requirement.

The Series A Preferred Stock is convertible into common stock at a rate of one share of common stock for each converted share of preferred stock at any time at the option of the holders by written notice of conversion to the Company. The Series A Preferred Stock will automatically convert to common when: a) the Company has achieved the listing of its common stock on a national securities exchange; and b) a Form S-1 registration statement covering the resale of the common shares underlying the Company's preferred stock is declared effective by the SEC.

As previously announced, the Company filed an amended Form 10 registration statement on January 28, 2005, which is subject to review by the SEC staff. The Form 10 will not become effective until the SEC completes its review of the filing. There is no assurance that the SEC will declare the Form 10 effective or that the AMEX listing will be approved.

The common stock issuable upon conversion of the Series A Preferred Stock has not been and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

ABOUT PROSPECT MEDICAL HOLDINGS

Prospect Medical Holdings, Inc. is a health care management services organization that provides management services primarily to 10 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.

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 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.