UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_____________________________

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2003
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
For the transition period from
______ to ______

Commission File Number: 0-22392

Prime Medical Services, Inc.
(Exact name of Registrant as specified in its charter)

	Delaware				74-2652727
	(State or other jurisdiction of incorporation)				(IRS Employer Identification No.)

1301 Capitol of Texas Highway Suite 200B, Austin, Texas 78746
(Address of principal executive offices) (Zip Code)

(512) 328-2892
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES X NO

Indicate by check mark whether the registrant is an accelerated filer (as described in Rule 12b-2 of the Exchange Act).

YES X NO

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Title of Each Class
Common Stock, $.01 par value

Number of Shares Outstanding at
November 11, 2003
17,081,869

PART I

ITEM 1 — FINANCIAL INFORMATION

PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in thousands, except per share data)	2003				2002			2003			2002
Revenue:
Lithotripsy	$	15,658		$	18,206		$	45,756		$	53,438
Manufacturing		23,641			24,991			70,780			62,316
Refractive		--			1,897			--			9,955
Other		260			204			785			596

Total revenue		39,559			45,298			117,321			126,305

Cost of services and general and
administrative expenses:
Lithotripsy		5,963			6,306			18,974			20,039
Manufacturing		22,503			21,188			64,923			52,330
Refractive		--			2,268			--			8,490
Corporate		901			936			2,341			2,554
Impairment and other costs		--			17,740			--			17,740

		29,367			48,438			86,238			101,153
Depreciation and amortization		1,759			1,691			5,410			5,300

		31,126			50,129			91,648			106,453

Operating income (loss)		8,433			(4,831	)		25,673			19,852

Other income (expenses):
Interest and dividends		43			39			264			167
Interest expense		(2,338	)		(2,486	)		(6,875	)		(7,563	)
Loan fees		(257	)		(556	)		(257	)		(1,069	)
Other, net		203			764			(55	)		790

		(2,349	)		(2,239	)		(6,923	)		(7,675	)

Income (loss) before provision (benefit) for income
taxes and minority interests		6,084			(7,070	)		18,750			12,177
Minority interest in consolidated income		4,910			6,067			12,803			16,978
Provision (benefit) for income taxes		399			(5,030	)		2,022			(1,831	)

Net income (loss)	$	775		$	(8,107	)	$	3,925		$	(2,970	)

Basic earnings per share:
Net income (loss)	$	0.05		$	(0.48	)	$	0.23		$	(0.18	)

Weighted average shares outstanding		17,145			16,911			17,182			16,163

Diluted earnings per share:
Net income (loss)	$	0.04		$	(0.48	)	$	0.23		$	(0.18	)

Weighted average shares outstanding		17,366			16,911			17,387			16,163

See accompanying notes to consolidated financial statements.

PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

($ in thousands)	September 30, 2003 (Unaudited)				December 31, 2002 (Audited)

ASSETS

Current assets:
Cash and cash equivalents	$	8,701		$	20,174
Accounts receivable, less allowance for doubtful
accounts of $342 in 2003 and $629 in 2002		21,606			21,137
Other receivables		450			736
Deferred income taxes		5,383			5,662
Prepaid expenses and other current assets		5,887			3,513
Inventory		21,577			16,407

Total current assets		63,604			67,629

Property and equipment:
Equipment, furniture and fixtures		43,834			41,924
Building and leasehold improvements		11,214			10,195

		55,048			52,119
Less accumulated depreciation and amortization		(30,090	)		(27,435	)

Property and equipment, net		24,958			24,684

Other investments		3,028			4,279
Goodwill, at cost		177,378			161,783
Other noncurrent assets		7,640			7,464

	$	276,608		$	265,839

See accompanying notes to consolidated financial statements.

PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)

($ in thousands, except share data)	September 30, 2003 (Unaudited)				December 31, 2002 (Audited)

LIABILITIES

Current liabilities:
Current portion of long-term debt	$	3,286		$	2,395
Accounts payable		6,917			6,570
Accrued distributions to minority interests		--			8,333
Accrued expenses		10,824			10,548
Customer deposits		4,389			3,589

Total current liabilities		25,416			31,435

Long-term debt, net of current portion		124,929			118,306
Deferred income taxes		12,499			7,522

Total liabilities		162,844			157,263

Minority interest		9,451			9,942

STOCKHOLDERS' EQUITY

Preferred stock, $.01 par value; 1,000,000 shares authorized; none outstanding		--			--
Common stock, $0.01 par value; 40,000,000 shares authorized; 17,324,585 shares
issued in 2003 and 17,081,869 outstanding in 2003 and 16,931,017 issued and outstanding in 2002		173			169
Capital in excess of par value		70,813			67,849
Accumulated earnings		34,541			30,616
Treasury stock, at cost 242,716 shares in 2003		(1,214	)		--

Total stockholders' equity		104,313			98,634

	$	276,608		$	265,839

See accompanying notes to consolidated financial statements.

PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30,
($ in thousands)	2003				2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Fee and other revenue collected	$	120,355		$	123,983
Cash paid to employees, suppliers of goods and others		(92,421	)		(86,569	)
Purchase of investments		--			(199	)
Proceeds from sales and maturities of investments		--			811
Interest received		264			167
Interest paid		(3,397	)		(5,562	)
Taxes refunded		8			2,536

Net cash provided by operating activities		24,809			35,167

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of entities, net of cash acquired		(12,513	)		(17,026	)
Escrow deposits		(1,742	)		--
Purchases of equipment and leasehold improvements		(5,128	)		(3,644	)
Distributions from investments		274			2,105
Other		243			409

Net cash used in investing activities		(18,866	)		(18,156	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable		19,572			5,749
Payments on notes payable, exclusive of interest		(14,148	)		(9,291	)
Distributions to minority interest		(21,346	)		(25,066	)
Contributions by minority interest, net of buyouts		(280	)		1,248
Purchase of treasury stock		(1,214	)		--
Exercise of stock options		--			1,537

Net cash used in financing activities		(17,416	)		(25,823	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(11,473	)		(8,812	)

Cash and cash equivalents, beginning of period		20,174			16,503

Cash and cash equivalents, end of period	$	8,701		$	7,691

See accompanying notes to consolidated financial statements.

PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited)

	Nine Months Ended September 30,
($ in thousands)	2003			2002
Reconciliation of net income (loss) to net cash provided by operating activities:
Net income (loss)	$	3,925	$	(2,970