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Prospect Medical Holdings, Inc. Securities Litigation

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Prospect Medical Holdings, Inc. (NasdaqGM: PZZ) shareholder litigation in
connection with alleged unfair takeover offer

On August 16, 2010, Prospect Medical Holdings, Inc. (“Prospect Medical” or the
“Company”) announced that it had agreed to sell the Company to an entity
sponsored by Leonard Green & Partners, L.P. ("Green") in which certain stockholders
of Prospect will also participate. Under the terms of the transaction, Prospect Medical
shareholders will receive $8.50 in cash for each Prospect Medical share of common
stock they own for a total transaction value of approximately $363 million, including the
assumption of debt.

Some directors and officers of Prospect Medical that currently own nearly 50% of
Prospect’s outstanding shares have entered into a agreement in which they have
agreed to vote all of their shares in favor of the transaction and have also agreed to
exchange approximately 6.2 million of their Prospect shares for equity interests in the
sponsored purchasing entity in lieu of their receipt of the cash merger consideration
for those shares.

The investigation concerns whether the Prospect Medical Board of Directors breached
their fiduciary duties to Prospect Medical stockholders by failing to adequately shop
the Company before entering into this transaction and whether Green is underpaying
for Prospect Medical shares, thus unlawfully harming Prospect Medical stockholders.
In particular, at least one analyst set a price target for Prospect Medical stock of
$16.20 per share.

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