_______________________________________________________

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 June 30, 2004
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 or organization)				(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
July 27, 2004
20,662,677

PART I

ITEM 1 — FINANCIAL INFORMATION

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

	Three Months Ended June 30,						Six Months Ended June 30,
($ in thousands, except per share data)	2004			2003			2004			2003
Revenue:
Urology	$	19,767		$	15,105		$	35,986		$	30,098
Manufacturing		30,513			21,544			54,270			47,139
Other		238			262			475			525

Total revenue		50,518			36,911			90,731			77,762

Cost of services and general and
administrative expenses:
Urology		8,709			6,579			15,706			13,011
Manufacturing		27,507			19,373			49,211			42,420
Corporate		1,048			795			2,024			1,440

		37,264			26,747			66,941			56,871
Depreciation and amortization		1,846			1,831			3,466			3,651

		39,110			28,578			70,407			60,522

Operating income		11,408			8,333			20,324			17,240

Other income (expenses):
Interest and dividends		61			115			149			221
Interest expense		(2,364	)		(2,441	)		(4,653	)		(4,537	)
Other, net		(72	)		(182	)		(32	)		(258	)

		(2,375	)		(2,508	)		(4,536	)		(4,574	)

Income before provision for income
taxes and minority interests		9,033			5,825			15,788			12,666

Minority interest in consolidated income		5,373			3,884			10,264			7,893

Provision for income taxes		1,338			617			2,021			1,623

Net income	$	2,322		$	1,324		$	3,503		$	3,150

Basic earnings per share:
Net income	$	0.11		$	0.08		$	0.18		$	0.18

Weighted average shares outstanding		20,679			17,325			19,674			17,200

Diluted earnings per share:
Net income	$	0.11		$	0.08		$	0.18		$	0.18

Weighted average shares outstanding		20,952			17,574			19,913			17,398

See accompanying notes to consolidated financial statements.

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PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

($ in thousands)	June 30, 2004 (Unaudited)			December 31, 2003 (Audited)
ASSETS

Current assets:
Cash and cash equivalents	$	3,775		$	9,780
Accounts receivable, less allowance for doubtful
accounts of $445 in 2004 and $512 in 2003		27,054			27,245
Other receivables		630			795
Deferred income taxes		12,269			8,385
Prepaid expenses and other current assets		2,624			1,617
Inventory		25,365			21,288

Total current assets		71,717			69,110

Property and equipment:
Equipment, furniture and fixtures		41,111			40,161
Building and leasehold improvements		12,021			11,235

		53,132			51,396

Less accumulated depreciation and amortization		(25,246	)		(27,440	)

Property and equipment, net		27,886			23,956

Other investments		2,909			3,088
Goodwill, at cost		185,299			177,974
Other noncurrent assets		7,113			5,840

	$	294,924		$	279,968

See accompanying notes to consolidated financial statements.

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

($ in thousands, except share data)	June 30, 2004 (Unaudited)			December 31, 2003 (Audited)
LIABILITIES

Current liabilities:
Current portion of long-term debt	$	3,312		$	3,345
Accounts payable		9,601			8,617
Accrued distributions to minority interests		--			6,908
Accrued expenses		13,817			10,137
Customer deposits		5,095			6,259

Total current liabilities		31,825			35,266

Long-term debt, net of current portion		107,444			111,728
Other long term obligations		1,575			1,397
Deferred income taxes		18,404			17,889

Total liabilities		159,248			166,280

Minority interest		8,215			7,077

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; 21,045,643 shares issued
in 2004 and 17,324,585 issued in 2003; 20,662,677 outstanding in 2004 and		210			173
17,081,869 outstanding in 2003
Capital in excess of par value		88,827			70,813
Accumulated earnings		40,342			36,839
Treasury stock, at cost, 382,966 shares in 2004 and 242,716 in 2003		(1,918	)		(1,214	)

Total stockholders' equity		127,461			106,611

	$	294,924		$	279,968

See accompanying notes to consolidated financial statements.

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

	Six Months Ended June 30,
($ in thousands)	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Fee and other revenue collected	$	93,933		$	80,122
Cash paid to employees, suppliers of goods and others		(74,985	)		(64,156	)
Interest received		148			221
Interest paid		(4,750	)		(2,961	)
Taxes refunded		557			203

Net cash provided by operating activities		14,903			13,429

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of entities, net of cash acquired		3,180			(12,301	)
Escrow deposits		513			(1,742	)
Purchases of equipment and leasehold improvements		(5,101	)		(3,469	)
Distributions from investments		221			273
Proceeds from sales of equipment		500			23

Net cash used in investing activities		(687	)		(17,216	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable		1,007			19,371
Payments on notes payable, exclusive of interest		(4,725	)		(8,353	)
Distributions to minority interest		(16,939	)		(16,842	)
Contributions by minority interest, net of buyouts		313			(1,350	)
Exercise of stock options		123			--

Net cash used in financing activities		(20,221	)		(7,174	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(6,005	)		(10,961	)

Cash and cash equivalents, beginning of period		9,780			20,174

Cash and cash equivalents, end of period	$	3,775		$	9,213

See accompanying notes to consolidated financial statements.

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

	Six Months Ended June 30,
($ in thousands)	2004			2003
Reconciliation of net income to net cash provided by operating activities:
Net income	$	3,503		$	3,150
Adjustments to reconcile net income to net cash provided by operating activities:
Minority interest in consolidated income		10,264			7,893
Depreciation and amortization		3,466			3,651
Provision for uncollectible accounts		(64	)		154
Equity in (earnings) loss of affiliates		(42	)		17
Proceeds from termination of interest rate swap		--			1,215
Stock buyback agreements		(816	)		--
Other		(352	)		324

Changes in operating assets and liabilities, net of effect of purchase transactions:
Accounts receivable		2,884			1,804
Other receivables		(115	)		2,406
Other assets		(1,467	)		(2,956	)
Accounts payable		(3,200	)		(3,578	)
Accrued expenses		842			(651	)

Total adjustments		11,400			10,279

Net cash provided by operating activities	$	14,903		$	13,429

See accompanying notes to consolidated financial statements.

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PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES