Prospect Medical Holdings Announces Strategic Investment in Brotman Medical Center Acquisition Company.

CULVER CITY, Calif. -- Prospect Medical Holdings, Inc. ("Prospect"), a managed care management company serving 10 affiliated Independent Physician Associations ("IPAs") in Southern California, today announced that it has made a $675,000 investment towards the purchase of a minority stake in Brotman Medical Center ("Brotman") from Tenet Healthcare. The remainder of the ownership in Brotman will be held by admitting physicians, other strategic investors and the Brotman management team, none of whom will have a controlling stake in Brotman. The total purchase price for Brotman will be approximately $11 million, substantially all of which will be financed under terms of a financing commitment currently in place. The financing is non-recourse to Prospect. Prospect's investment is in a newly formed acquisition entity, Brotman Medical Center, Inc. ("BMCI"). Exclusive of transaction costs, Prospect is not required to make any additional investment in the transaction, and will not be responsible for any of the obligations of BMCI or Brotman. Prospect does not expect its total investment in BMCI, inclusive of all related expenses, to exceed $1 million, all of which will be funded from Prospect's existing cash resources.

Brotman Medical Center, founded in 1924, is a 432-bed hospital located at 3828 Delmas Terrace in Culver City, California. The hospital offers a wide range of inpatient and outpatient acute care services as well as rehabilitation, psychiatric care and chemical dependency services. The hospital also operates a 24-hour emergency services center. Brotman is fully accredited by the Joint Commission on the Accreditation of Healthcare Organizations.

Dr. Jack Terner, Chairman and Chief Executive Officer of Prospect, commented, "We are very pleased to announce this strategic investment in Brotman Medical Center. Brotman will continue to be run by its existing, excellent management team. Prospect is not in the business of owning or managing hospitals. However, we believe that there is a great opportunity in West Los Angeles for an IPA company like Prospect Medical and a top quality hospital like Brotman Medical Center to partner with HMOs to jointly contract and market Medicare services. We believe this will result in better patient service, will be a more favorable arrangement for HMOs and will provide Prospect with an exclusive opportunity to increase Medicare membership in this important region of Los Angeles. Perhaps most importantly, this will enable Brotman to continue to expand and improve its high quality service offerings to the surrounding community."

Closing of the transaction is dependent upon satisfaction of all closing conditions required by the asset sale agreement, obtaining various state and federal regulatory approvals, and finalizing all necessary investor participation and financing arrangements.

ABOUT THE COMPANY

Prospect Medical Holdings, Inc. is a health care management services organization that provides management services primarily to 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. Prospect's 10 IPAs are comprised of approximately 4,000 primary care and specialist physicians serving approximately 180,000 HMO enrollees at March 31, 2005.

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.