PZZ Prospect Medical Holdings,

Prospect Medical Holdings, Inc. (NYSE Amex: PZZ) (�Prospect�), which owns and operates five community hospitals and manages the medical care of approximately 183,000 HMO enrollees in southern California, today announced financial results for its fiscal 2009 second quarter ended March 31, 2009. Results for all periods exclude the Antelope Valley entities since their sale on August 1, 2008, and pre-sale results have been classified as discontinued operations in the consolidated financial statements.

Results for the second quarter of fiscal 2009 continued to reflect the benefits of management�s ongoing initiatives to reduce costs throughout the organization, improve operating efficiencies, and strengthen the balance sheet. Consolidated operating margins during the fiscal 2009 second quarter improved by approximately 6% from the same period one year ago. Adjusted EBITDA increased 41.4% to $14.0 million and net income attributable to common shareholders improved by approximately $4.8 million from the prior year period. Holding Company operating expenses declined by approximately 24% through the first six months of fiscal 2009 compared to the first half of fiscal 2008. Second quarter improved results were after higher interest expense of $6.6 million during the second quarter of fiscal 2009, an increase of $1.3 million from the second quarter of fiscal 2008. Prospect continues to timely pay all of its scheduled interest and principal payments, together with supplemental principal payments, as it prioritizes debt reduction. The Company generated positive cash flow from operations of $5.0 million through the first six months of fiscal 2009, ending the quarter with cash, cash equivalents and investments of $32.2 million.

FISCAL 2009 SECOND QUARTER RESULTS

Consolidated revenues for the second quarter of fiscal 2009 rose 3.6% to $86.1 million from $83.1 million in the same period last year. A 17.0% increase in revenue from the Hospital Services segment offset a 5.0% decrease in revenues at the IPA Management segment.

Operating income for the second quarter of fiscal 2009 increased 81.8% to $11.6 million from $6.4 million in the same period last year.

During the second quarter of fiscal 2009, interest expense rose to $6.6 million from $5.3 million in the same period last year, due to higher rates following the May 2008 credit agreement amendments, �make-whole� interest payments to the Company�s lenders when LIBOR falls below certain levels, and default interest discussed under �Classification of Debt� below. Non-cash gains related to changes in the fair market value of the Company�s interest rate swap arrangements totaled $955,000 during the second quarter of fiscal 2009 as compared to no such gain or loss in the comparable prior year period.

Net income attributable to common shareholders for the fiscal 2009 second quarter rose to $3.5 million or $0.17 per diluted share on approximately 20.7 million weighted average diluted shares outstanding, from a net loss of $1.3 million, or $0.11 per diluted share, on approximately 11.8 million weighted average diluted shares outstanding. The net loss attributable to common shareholders for the second quarter of fiscal 2008 included $2.0 million of non-cash, preferred stock dividends. There were no such dividends in the second quarter of fiscal 2009.

Adjusted EBITDA for the second quarter of fiscal 2009 increased 41.4% to $14.0 million from $9.9 million in the same period last year. For the trailing twelve month period ended March 31, 2009, Adjusted EBITDA was $47.8 million (see accompanying reconciliation tables in this release).

SEGMENT RESULTS

IPA Management

The IPA Management segment includes the results of Prospect�s legacy IPA operations and ProMed, which was acquired on June 1, 2007.

� �

($ in 000s) (unaudited)

Three Months Ended

March 31,

Six Months Ended

March 31,

2009 � 2008 2009 � 2008 � Total managed care revenues $ 48,159 $ 50,681 $ 96,290 $ 101,249 Total managed care cost of revenues � 36,956 � 40,208 � 74,567 � 81,476 Gross margin 11,204 10,473 21,723 19,773 � General and administrative 7,479 7,497 14,675 15,007 Depreciation and amortization � 884 � 877 � 1,755 � 1,729 Total non-medical expenses 8,364 8,374 16,430 16,736 � Income from unconsolidated joint venture �

595

�

694

�

947

�

1,169

� Operating income $ 3,435 $ 2,793 $ 6,240 $ 4,206 �

Managed care revenues for the second quarter of fiscal 2009 decreased by approximately $2.5 million, or 5.0%, compared with the second quarter of fiscal 2008. This decrease reflects the combined impact of ProMed�s cancellation of certain unprofitable Medi-Cal contracts and lower HMO enrollment, partially offset by higher capitation rates.

Gross margin improved to 23.2% from 20.7% in the second quarter of fiscal 2008, due primarily to the unprofitable contract cancellations referenced above and improved claims expense management.

General and administrative (�G&A�) expenses for the second quarter of fiscal 2009 remained unchanged at $7.5 million.

Income from unconsolidated joint ventures amounted to approximately $0.6 million in the second quarter of fiscal 2009 as compared to approximately $0.7 million in the second quarter of fiscal 2008 due to slight changes in enrollment and share of hospital costs.

Operating income for the second quarter of fiscal 2009 rose 23% to $3.4 million from $2.8 million in the second quarter of fiscal 2008 due to the combination of factors referenced above.

Hospital Services

Prospect�s Hospital Services segment consists of Alta�s four community-based hospitals in southern California. Prospect acquired Alta in August 2007.

� � ($ in 000s) (unaudited) Three Months Ended

March 31,

Six Months Ended

March 31,

� � 2009 2008 2009 2008 � Net hospital services patient revenues $ 37,908 $ 32,396 $ 73,230 $ 59,682 Operating expenses: Hospital operating expenses 22,858 20,967 45,003 38,968 General and administrative 3,050 2,912 6,217 5,535 Depreciation and amortization � 936 � 1,023 � 1,827 � 2,065 Total operating expenses � 26,843 � 24,902 � 53,048 � 46,568 � Operating income $ 11,065 $ 7,494 $ 20,183 $ 13,114 �

Net hospital services revenues for the second quarter of fiscal 2009 increased by 17% to $37.9 million from $32.4 million in the same period last year, primarily reflecting the higher Medi-Cal contribution, plus smaller increases in all other payor categories. A 9.1% increase in the average length of patients� stay was the primary driver of a 4.4% increase in adjusted patient days during the current year quarter, to 25,600. This increase in adjusted patient days, combined with an 11.2% increase in net inpatient revenue per patient day to $1,478, account for the majority of the revenue increase.

Total hospital operating expenses increased to $26.8 million for the fiscal 2009 second quarter, given the increase in patient days, but declined to 70.8% of revenues from 76.9% of revenues in the same period last year as a result of efficiencies attained when operating at the higher volumes.

Hospital operating income for the second quarter of fiscal 2009 rose 47.6% to $11.1 million, from $7.5 million in the second quarter of fiscal 2008, due to the combination of factors referenced above.

Brotman Medical Center

As previously announced, Prospect increased its ownership in Brotman Medical Center (�Brotman�) from approximately 33% to approximately 72%, effective April 14, 2009. Founded in 1924 and based in Culver City, California, Brotman is a 420-bed acute care hospital that offers a wide range of inpatient and outpatient services, including a 24-hour emergency room, rehabilitation, psychiatric care and chemical dependency services. Effective April 14, 2009, Prospect will begin consolidating Brotman into its financial statements and expects to publish stand alone Brotman audited and unaudited financial statements and pro forma financial information by no later than June 30, 2009. Accordingly, Prospect results through the second quarter of fiscal 2009 exclude Brotman.

Classification of Debt

The Company has met all interest and principal payment obligations on its long-term debt since inception of the loans. However, as previously disclosed, on March�19, 2009 the Company received notices from its lenders asserting that the Company was in default of a requirement to sell certain operating assets by a specified date. Additionally, on April 17, 2009, the Company received notices from its lenders asserting that the Company�s April 14, 2009 increase in ownership of Brotman violated certain provisions of the amended credit agreements. The Company has contested both assertions. Based on the notices of asserted default, the Company has classified all related debt and associated interest rate swap liability as current at March 31, 2009.

The Company is in discussions with its lenders to seek resolution of these matters. However, there can be no assurance that these matters will be resolved on a basis favorable to the Company. The lenders also began assessing default interest (additional 2% per annum) effective with the first asserted event of default of March 19, 2009.

Prospect has formally engaged an investment banking firm to undertake a refinancing of the current debt. Notwithstanding current market conditions, based on the Company�s sustained performance and cash flow generation, the Company is optimistic that it will be able to complete a refinancing - on more attractive terms and with a capital partner more aligned with, and supportive of, the Company�s strong performance and disciplined future expansion plans.

Use of Adjusted EBITDA

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and other amounts considered by management to be non-recurring) is not a measure of financial performance under generally accepted accounting principles (�GAAP�). Management believes Adjusted EBITDA, in addition to operating income, net income and other GAAP measures, is a useful indicator of the Company�s financial and operating performance and its ability to generate cash flows from operations that are available for taxes, capital expenditures and debt service. Investors should recognize that Adjusted EBITDA might not be comparable to similarly-titled measures of other companies. This measure should be considered in addition to, and not as a substitute for, or superior to, any measure of performance prepared in accordance with GAAP. Reconciliations of Adjusted EBITDA amounts to the most directly comparable GAAP measures for each of the quarterly periods in fiscal 2008 and fiscal 2009 are included in the financial information provided as part of this release.

Conference Call

Management will host a conference call on Tuesday, May 19, 2009 at 1:00 pm ET / 10:00 am PT, to discuss these results. Interested parties may participate in the call by dialing (866) 267-2584 (Domestic) or (706) 634-4739 (International) approximately 10 minutes before the call is scheduled to begin and ask to be connected to the Prospect Medical Holdings conference call.

The conference call will be broadcast live over the internet at the following link:

http://investor.shareholder.com/media/eventdetail.cfm?eventid=69081&CompanyID=PROSPECT&e=1&mediaKey=FD1088B6F9BDB79FFAEA6E426404E661

To listen to the live call on the internet, go to the website 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 30 days.

ABOUT PROSPECT MEDICAL HOLDINGS

Prospect Medical Holdings operates five community-based hospitals in the greater Los Angeles area and manages the medical care of approximately 183,000 individuals enrolled in HMO plans in Southern California, through a network of approximately 14,000 specialist and primary care physicians.

This press release contains forward-looking statements. Additional written or oral forward-looking statements may be made by Prospect 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, involve risks and uncertainties which may affect the Company's business and prospects, including those outlined in Prospect's Form 10-K filed on December 29, 2008, as well as risks and uncertainties arising from Prospect's acquisition of Alta and ProMed, and the debt incurred by Prospect in connection with those acquisitions. 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 Operations

($ in 000s, except per share data)

(Unaudited)

� Three months ended March 31, Six months ended March 31, 2009 � 2008 2009 � 2008 Revenues: Managed care revenues $ 48,159 $ 50,681 $ 96,290 $ 101,249 Net hospital services revenues � 37,908 � � 32,396 � � 73,231 � � 59,682 � Total revenues 86,067 83,077 169,521 160,931 � Operating expenses: Managed care cost of revenues 36,956 40,208 74,567 81,476 Hospital operating expenses 22,858 20,967 45,003 38,968 General and administrative 13,380 14,281 25,765 26,935 Depreciation and amortization � 1,823 � � 1,907 � � 3,589 � � 3,808 � Total operating expenses 75,016 77,363 148,924 151,187 � Operating income from unconsolidated joint venture � 595 � � 694 � � 947 � � 1,169 � Operating income 11,646 6,408 21,544 10,913 Other (income) expense: Investment income (20 ) (149 ) (68 ) (443 ) Interest expense and amortization of deferred financing costs 6,576 5,294 12,714 9,493 (Gain) loss in value of interest rate swap arrangements � (955 ) � - � � 8,713 � � 877 � Total other (income) expense, net 5,601 5,145 21,359 9,927 � � Income from continuing operations before income taxes 6,045 1,263 184 986 Provision for income taxes � 2,496 � � 456 � � 76 � � 355 � Income from continuing operations before minority interest 3,549 807 108 631 Minority interest � 1 � � 3 � � 4 � � 8 � Income from continuing operations 3,548 804 104 623 Loss from discontinued operations, net of tax � - � � (76 ) � - � � (392 ) Net income before preferred dividend 3,548 728 104 231 Dividend to preferred stockholders � - � � (1,983 ) � - � � (3,865 ) Net income (loss) attributable to common stockholders $ 3,548 � $ (1,255 ) $ 104 � $ (3,634 ) � Per share data: Net income (loss) per share attributable to common stockholders: Basic $ 0.17 � $ (0.11 ) $ 0.01 � $ (0.31 ) Diluted $ 0.17 � $ (0.11 ) $ 0.01 � $ (0.31 ) � Weighted average shares outstanding Basic � 20,508,444 � � 11,782,567 � � 20,508,444 � � 11,747,942 � Diluted � 20,679,247 � � 11,782,567 � � 20,681,522 � � 11,747,942 � � � �

Prospect Medical Holdings, Inc.

Condensed Consolidated Balance Sheets

($ in 000s)

� March 31, September 30, 2009

(unaudited)

2008

ASSETS

Current assets: Cash and cash equivalents $ 31,533 $ 33,583 Investments, primarily restricted certificates of deposit 664 637 Patient accounts receivable, net of allowance for doubtful accounts of $4,617and $3,891 at March 31, 2009 and September 30, 2008 22,571 18,314 Government program receivables 2,853 4,365 Risk pool receivables - 338 Other receivables 2,751 2,599 Third party settlements 1,137 216 Notes receivable current portion 204 224 Refundable income taxes, net 728 2,654 Deferred income taxes, net 5,788 5,788 Prepaid expenses and other current assets � 4,674 � � 4,236 � Total current assets � 72,904 �

72,954

� Property, improvements and equipment: Land and land improvements 18,501 18,452 Buildings 22,413 22,233 Leasehold improvements 1,912 1,505 Equipment 10,623 10,628 Furniture and fixtures � 913 � � 913 � 54,362 53,730 Less accumulated depreciation and amortization � (9,375 ) � (7,911 ) Property, improvements and equipment, net 44,987 45,820 Notes receivables, long term portion 237 238 Deposits and other assets 2,222 778 Deferred financing costs, net 594 661 Goodwill 128,877 128,877 Other intangible assets, net � 45,615 � � 47,740 � Total assets $ 295,436 � $ 297,068 � �

LIABILITIES AND SHAREHOLDERS� EQUITY

Current liabilities: Accrued medical claims and other healthcare costs payable $ 19,374 $ 20,480 Accounts payable and other accrued liabilities 11,227 16,296 Accrued salaries, wages and benefits 12,853 11,257 Income taxes payable 1,998 - Current portion of capital leases 403 341 Debt, due on demand 137,832 12,100 Interest rate swap liability 14,726 - Other current liabilities � 689 � � 107 � Total current liabilities 199,103 60,581 Long-term debt, less current portion - 131,921 Deferred income taxes 21,129 24,434 Malpractice reserve 786 786 Capital leases, net of current portion 380 442 Interest rate swap liability - 6,013 Other long-term liabilities � 15 � � - � Total liabilities � 221,413 � � 224,176 � Minority interest 85 81 Total shareholders� equity � 73,937 � � 72,811 � Total liabilities and shareholders� equity $ 295,436 � $ 297,068 � �

Adjusted EBITDA Reconciliation

(Unaudited) ($ in millions)

A reconciliation of Adjusted EBITDA (also referred to as �Normalized EBITDA� in Management discussions) to the most directly comparable GAAP measure in accordance with SEC Regulation G follows, for each of the quarters of fiscal 2008 and fiscal 2009.

� � � � � � Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 � Operating income � per earnings release (1) $ 4.1 $ 6.4 $ 4.1 $ 8.7 $ 9.9 $ 11.6 Depreciation and amortization 1.9 1.9 1.9 2.1 1.8 1.8 Prior CEO severance 1.3 � Other adjustments (2) � 2.4 � 1.6 � 2.9 � 0.8 � 0.3 � 0.6 � � Adjusted EBITDA - Quarterly $ 8.4 $ 9.9 $ 10.2 $ 11.6 $ 12.0 $ 14.0 � � Adjusted EBITDA � Trailing Twelve Month (TTM) $ 40.1 $ 47.8 � � Net Debt: Adjusted TTM EBITDA Ratio: Ending Debt $ 137.8 Less: Ending cash, cash equivalents and investments � (32.2 ) Ending Net Debt $ 105.6 � Net Debt: Adjusted TTM EBITDA Ratio � 2.21 � � � � � � (1) � � Operating income for all of fiscal 2008 is not intended to be identical to the sum of the quarterly operating income per prior earnings releases due primarily to classification of the results of discontinued operations. � (2) Comprised of amounts considered by management to be non-recurring, including certain legacy IPA costs, special investigation costs, restatement costs and lender charges. The majority of the Q4 08 and Q1 09 items, and approximately half of Q2 09 items, represent charges for stock-based compensation.