Prospect Medical Holdings Provides Update on Filing of Form 10-K And Receives Notification...

Prospect Medical Holdings Provides Update on Filing of Form 10-K And Receives Notification From AMEX Regarding Temporary Common Stock Trading Suspension

CULVER CITY, Calif.--(Business Wire)--Prospect Medical Holdings, Inc. (AMEX: PZZ) ("Prospect"), which
manages the medical care of approximately 240,000 HMO enrollees and
operates four community hospitals in southern California, today
announced that it was unable to file its Form 10-K for the fiscal year
ended September 30, 2007 within a 15-day extension period afforded by
Rule 12b-25 that ended on January 15, 2008. Prospect filed a Form
12b-25 with the Securities and Exchange Commission on December 28,
2007.

As previously announced, Prospect's management and the management
of Alta Healthcare System, Inc. ("Alta") are working together with
their respective independent auditors to complete a review and
restatement of Alta's pre-acquisition audited financial statements for
the year ended December 31, 2006. In connection with that review and
restatement, the Audit Committee of Prospect's Board of Directors has
retained independent counsel to assist and advise the Audit Committee.
The review and restatement process is not yet completed and, as a
consequence, Prospect has not yet been able to complete its
consolidated financial statements for its fiscal year ended September
30, 2007. As a result, Prospect was unable to file its Form 10-K
annual report by either December 31, 2007 or the January 15, 2008 due
date provided by the 15-day extension period. The Company expects to
file its fiscal 2007 Form 10-K by February 29, 2008. While the
cumulative net impact of finalizing the Alta review is not yet
determinable, Prospect continues to expect that any decrease in Alta's
2006 pre-tax income will be less than $5 million.

As a result of its inability to file its fiscal 2007 Form 10-K by
today's deadline or provide investors with financial information for
the 2007 fiscal year beyond what has been previously disclosed, The
American Stock Exchange has notified Prospect that, beginning on
January 16, 2008, trading in the Company's common stock will be halted
until either the Form 10-K is filed or additional financial
information is supplied.

Dr. Jack Terner, Chairman and Chief Executive Officer of Prospect,
commented, "We are in the final stages of the restatement and review
process, and expect to file our Form 10-K by the end of February. We
remain confident that Prospect's new, vertically-integrated operating
paradigm, in combination with ongoing investments in our core IPA
business, has positioned us to capitalize on the significant
opportunities in our industry and generate long-term value for our
shareholders."

ABOUT THE COMPANY

Prospect Medical Holdings manages the medical care of individuals
enrolled in HMO plans in Southern California. Prospect's
vertically-integrated medical services platform is comprised of
Independent Physician Associations ("IPAs"), which contract with HMOs
and health care professionals to provide a full range of services to
HMO enrollees, and four community-based hospitals. Prospect's
physician network is comprised of more than 9,000 specialist and
primary care physicians, and the Company contracts with most major
HMOs in southern California.

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, and the future introduction
of new products, 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 28, 2006, its Form 10-Q filed
on August 20, 2007, and those arising from Prospect's acquisition of
Alta, the debt incurred by Prospect in connection with its acquisition
of Alta, and any impact on Alta's historical financial statements that
may result from completion of Prospect's review and analysis of those
financial statements. 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.
Linda Hodges, 310-337-4170
Executive Vice President
Linda.hodges@prospectmedical.com
or
Investor Relations Counsel:
The Equity Group Inc.
Devin Sullivan, 212-836-9608
dsullivan@equityny.com

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