--------------------------------------------------------------------------------
                                  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 March 31, 1999

            [ ] Transition Report Pursuant to Section 13 or 15(d) of
                       the Securities 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                        (I.R.S. Employer
       incorporation or organization)                       Identification No.)


               1301 Capital of Texas Highway, 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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                               Number of Shares Outstanding at
         Title of Each Class                           April 30, 1999
         -------------------                           --------------
   Common Stock, $.01 par value                          17,104,767





<PAGE>












                                     PART I


                              FINANCIAL INFORMATION





























                                       -2-




<PAGE>



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

($ in thousands, except per share data)       Three Months Ended March 31,
                                                1999               1998
                                               ------             -----
Fee revenue:
     Lithotripsy:
         Fee revenues                         $19,496            $18,512
         Management fees                        1,351              1,069
         Equity income                            562                578
                                             --------           --------
                                               21,409             20,159
     Manufacturing                              3,400              2,433
     Prostatherapy                                518                 83
     Cardiac                                       55                120
                                             --------           --------
         Total fee revenue                     25,382             22,795
                                             --------           --------

Costs and expenses:
    Cost of services and general
      and administrative expense
        Lithotripsy                             6,042              5,409
        Manufacturing                           2,454              1,698
        Prostatherapy                             457                108
        Cardiac                                    61                101
        Corporate                                 871              1,161
        Nonrecurring development 
          and other costs                         --               1,617
                                             --------           --------

                                                9,885             10,094

    Depreciation and amortization               2,475              2,568
                                             --------           --------
                                               12,360             12,662
                                             --------           --------
Operating income                               13,022             10,133

Other income (deductions):
    Interest income                               405                183
    Interest expense                           (2,329)            (1,783)
    Financing costs                               --              (4,982)
    Other, net                                   (338)               156
                                             --------           --------

                                               (2,262)            (6,426)
                                             --------           --------
Income before provision for income taxes
    and minority interest                      10,760              3,707

Minority interest in consolidated income        5,443              5,032

Provision for income taxes                      2,155               (157)
                                             --------           --------

Net income (loss)                            $  3,162           $ (1,168)
                                             ========           ======== 
                                             

Basic earnings per share:
     Net income (loss)                       $   0.18           $  (0.06)
                                             ========           ========

     Weighted average shares outstanding       17,387             19,313
                                             ========           ========

Diluted earnings per share:
     Net income (loss)                       $   0.18           $  (0.06)
                                             ========           ========

     Weighted average shares outstanding       17,495             19,313
                                             ========           ========

                 See notes to consolidated financial statements.
                                       -3-


<PAGE>





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

($ in thousands)


                                                     March 31,      December 31,
                                                       1999            1998
                                                       ----            ----


ASSETS

Current assets:
     Cash                                            $ 34,766          $ 40,146
     Accounts receivable, less allowance
       for doubtful accounts of $954 in
       1999 and $966 in 1998                           22,533            22,321
     Other receivables                                  3,160             2,228
     Deferred income taxes                              1,883             2,330
     Prepaid expenses and other current assets          4,031             2,774
                                                     --------          --------

          Total current assets                         66,373            69,799

Property and equipment:
     Equipment, furniture and fixtures                 36,577            34,485
     Building and leasehold improvements                2,081             2,073
                                                     --------          --------

                                                       38,658            36,558

Less accumulated depreciation and
     amortization                                    ( 21,083)          (18,471)
                                                     --------          --------

     Property and equipment, net                       17,575            18,087


Other investments                                      11,020            11,491
Goodwill, at cost, net of amortization                139,847           140,863
Other noncurrent assets                                   806               879
                                                     --------          --------

                                                     $235,621          $241,119
                                                     ========          ========













          See accompanying notes to consolidated financial statements.
                                       -4-


<PAGE>



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


($ in thousands)


                                                    March 31,      December 31,
                                                      1999            1998
                                                      ----            ----
LIABILITIES:

Current Liabilities:

  Current portion of long-term debt                  $    851         $     890
  Accounts payable                                      4,322             6,208
  Accrued distributions to minority interests           4,759             8,951
  Accrued expenses                                      7,600            12,051
                                                    ---------          --------

     Total current liabilities                         17,532            28,100

Long-term debt, net of current portion                102,129           100,987
Deferred income taxes                                   5,560             4,789
                                                    ---------          --------
     Total liabilities                                125,221           133,876

Minority interest                                      19,711            17,493

STOCKHOLDERS' EQUITY:

Preferred stock, $.01 par value,
  1,000,000 shares authorized;
  none outstanding                                       --                 --
Common stock, $.01 par value,
  40,000,000 shares authorized;
  19,354,267 issued in 1999 and
  19,350,267 issued in 1998                               194               194
Capital in excess of par value                         87,398            87,380
Accumulated earnings                                   21,777            18,615
Treasury stock, at cost, 2,130,000 in 1999
  and 1,845,200 in 1998                              ( 18,680)          (16,439)
                                                    ---------          --------
     Total stockholders' equity                        90,689            89,750
                                                    ---------          --------
                                                    $ 235,621          $241,119
                                                    =========          ========











          See accompanying notes to consolidated financial statements.
                                       -5-



<PAGE>





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

($ in thousands)


                                                       Three Months Ended
                                                            March 31,
                                                   1999                  1998
                                                 --------              ------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Fee and other revenue collected                $  24,637            $  23,103
  Cash paid to employees, suppliers
     of goods and others                           (16,917)             (14,742)
  Interest received                                    405                  183
  Interest paid                                     (4,515)              (2,295)
  Income taxes paid                                   (832)              (3,258)
                                                 ---------             --------
         Net cash provided by
         operating activities                        2,778                2,991
                                                 ---------             --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment and
    leasehold improvements                            (585)             ( 1,500)
  Distributions from investments                     1,064                  808
  Other                                                466                 (205)
                                                 ---------             --------
         Net cash provided by (used in)
         investing activities                          945                 (897)
                                                 ---------             --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on notes payable                        1,508              100,025
  Payments on notes payable, 
     exclusive of interest                            (406)             (79,326)
  Distributions to minority interest                (9,200)              (8,702)
  Contributions by minority interest                 1,224                  --
  Treasury stock purchased                          (2,241)                 --
  Exercise of stock options                             12                   24
                                                 ---------             --------
         Net cash provided by (used in)
         financing activities                       (9,103)              12,021
                                                 ---------             --------

NET INCREASE (DECREASE) IN CASH AND CASH
         EQUIVALENTS                                (5,380)              14,115

Cash and cash equivalents, beginning of period      40,146               23,770
                                                 ---------             --------

Cash and cash equivalents, end of period         $  34,766             $ 37,885
                                                 =========             ========
                                                 








                 See notes to consolidated financial statements
                                       -6-


<PAGE>



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

($ in thousands)


                                                       Three Months Ended
                                                            March 31,
                                                       1999                1998
                                                      ------              ------
Reconciliation of net income (loss) to
  cash provided by operating activities
    Net income (loss)                                $  3,162          $ (1,168)

    Adjustments to reconcile net income (loss)
         to cash provided by
         operating activities:
            Minority interest in consolidated income    5,443             5,032
            Depreciation and amortization               2,475             2,568
            Provision for deferred income taxes            92              (539)
            Equity in earnings of affiliates             (562)             (578)
            Other                                         141               --

            Changes in  operating  assets  
            and  liabilities:
                    Accounts receivable                   156               731
                    Other receivables                  (1,502)             (756)
                    Other current assets               (1,257)             (656)
                    Accounts payable                   (1,972)            2,273
                    Accrued expenses                   (3,398)           (3,916)
                                                     --------          --------

                    Total adjustments                    (384)            4,159
                                                     --------          --------

                  Net cash provided by
                    operating activities             $  2,778          $  2,991
                                                     ========          ========


















                 See notes to consolidated financial statements
                                       -7-


<PAGE>



                          PRIME MEDICAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                                   (Unaudited)

1.       General
--       -------

The accompanying  unaudited consolidated financial statements have been prepared
in conformity  with the accounting  principles  stated in the audited  financial
statements  for the year ended  December  31, 1998 and  reflect all  adjustments
which are, in the opinion of  management,  necessary for a fair statement of the
financial  position as of March 31, 1999 and the results of  operations  for the
periods  presented.  These  statements  have not been  audited by the  Company's
independent certified public accountants.  The operating results for the interim
periods are not necessarily indicative of results for the full fiscal year.

The notes to consolidated financial statements appearing in the Company's Annual
Report  on Form  10-K  for the year  ended  December  31,  1998  filed  with the
Securities Exchange Commission should be read in conjunction with this Quarterly
Report on Form 10-Q.  There have been no significant  changes in the information
reported  in those  notes  other than from  normal  business  activities  of the
Company.

2.       Noncash Investing and Financing Activities:
--       -------------------------------------------

In January  1999,  three of the  partnerships,  that the  Company is the general
partner,  merged into one partnership  ("New").  Prior to the merger, one of the
three  partnerships had been accounted for as an equity  investment and not been
consolidated  with the  Company  for  financial  statement  purposes.  After the
merger,  the new  partnership  has  been  included  as part of the  consolidated
financial statements.


3.       Earnings per share:
--       -------------------

Basic EPS is based on weighted average shares  outstanding  without any dilutive
effects considered. Diluted EPS reflects dilution from all contingently issuable
shares, including options. A reconciliation of such EPS data is as follows:





















                                       -8-


<PAGE>




                          PRIME MEDICAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999
                                   (Unaudited)
                                   (continued)

                                                   Basic           Diluted
                                                 earnings          earnings
                                                 per share        per share
                                                 ---------        ---------

($ in thousands, except per share data)

1999

Net income                                       $   3,162          $ 3,162
                                                 =========          =======



Average number of shares outstanding                17,387           17,387
Effect of dilutive options                             --               108
                                                 ---------          -------


  Shares for EPS  calculation                       17,387           17,495
                                                 =========          =======

Net income per share                             $    0.18          $  0.18
                                                 =========          =======

1998

Net loss                                         $  (1,168)         $(1,168)
                                                 =========          =======

Average number of shares outstanding                19,313           19,313
Effect of dilutive options                             --               --
                                                 ---------          -------


  Shares for EPS calculation                        19,313           19,313
                                                 =========          =======

Net loss per share                               $   (0.06)         $ (0.06)
                                                 =========          =======

Unexercised  stock options to purchase  1,186,500  and  1,358,000  shares of the
Company's  common  stock as of March 31, 1999 and 1998 were not  included in the
computation of diluted EPS because the effect would be antidilutive.

4.       Segment Reporting
--       -----------------

The Company has two reportable segments:  Medical,  which includes  lithotripsy,
prostatherapy  and cardiac  rehabilitation, and  Manufacturing.  Lithotripsy and
prostatherapy  provides  services related to the operation of the  lithotripters
and prostatherapy  units,  including  scheduling,  staffing,  training,  quality
assurance,  maintenance,  regulatory  compliance  and  contracting  with payors,
hospitals and surgery centers; and cardiac  rehabilitation  provides non-medical
management  services  for several  cardiac  rehabilitation  centers  pursuant to
agreements with physicians,  clinics and hospitals.  The  manufacturing  segment
provides  manufacturing  services and installation,  upgrade,  refurbishment and
repair of major medical equipment for mobile medical service providers.


                                       -9-



<PAGE>

The  Company  measures  performance  based  on  pre-tax  income  or loss for its
operating  segments,  which do not  include  unallocated  corporate  general and
administrative expenses and corporate interest revenue and expense.

<TABLE>
<S>                          <C>                       <C>                       <C>                       <C>    


    ($ in thousands)         Three Months Ended        Three Months Ended        Three Months Ended        Three Months Ended
                               March 31, 1999            March 31, 1999            March 31, 1998            March 31, 1998
                                   Medical                Manufacturing               Medical                Manufacturing
                                   -------                -------------               -------                -------------
      Revenue from
   external customers
                                   $21,982                    $3,400                  $20,362                    $2,433
      Intersegment
        revenues                         0                        46                        0                       135
     Segment profit                  7,734                       895                    7,887                       722
</TABLE>


The following is a reconciliation  of the measure of segment profit per above to
consolidated  income  before  income taxes per the  consolidated  statements  of
operations:
                                                   Three months ended March 31,

($ in thousands)                                      1999                1998
                                                     -----               -----
Total segment profit                                $8,629              $8,609
Unallocated corporate expenses
   General and administrative                         (871)             (1,161)
   Net interest expense                             (1,939)             (1,672)
   Loan fees and stock offering costs                  --               (4,982)
   Nonrecurring development and other costs            --               (1,617)
   Other, net                                         (502)               (502)
                                                    ------            --------
Unallocated corporate expenses total                (3,312)             (9,934)
                                                    ------            --------
Income before income taxes                          $5,317             $(1,325)
                                                    ======            ========



5.       Condensed Financial Information Regarding Guarantor Subsidiaries:
--       -----------------------------------------------------------------

Condensed consolidating  financial information regarding the Company,  Guarantor
Subsidiaries  and  Non-guarantor  Subsidiaries  for March 31, 1999 and 1998 is
presented below for purposes of complying with the reporting requirements of the
Guarantor  Subsidiaries.  Separate  financial  statements and other  disclosures
concerning each Guarantor  Subsidiary have not been presented because management
has determined that such information is not material to investors. The Guarantor
Subsidiaries  are  wholly-owned  subsidiaries  of the Company who have fully and
unconditionally guaranteed the 8.75% unsecured senior subordinated Notes.










                                      -10-


<PAGE>



                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                   (Unaudited)
                   Condensed Consolidating Statement of Income

                        Three Months Ended March 31, 1999

<TABLE>
<S>                                      <C>            <C>            <C>             <C>          <C>   

($ in thousands)
                                         Prime Medical   Guarantor     Non-Guarantor   Eliminating  Consolidated
                                         Services Inc.  Subsidiaries   Subsidiaries      Entries       Total
                                         -------------  ------------   -------------     -------       -----



Fee revenue:
Lithotripsy:
     Fee revenues                         $     --          $ 5,009       $  14,487      $    --      $  19,496
     Management fees                            --              789             562           --          1,351
     Equity income                            7,999           4,434             --        (11,871)          562
                                          ---------         -------       ---------      --------     ---------
                                              7,999          10,232          15,049       (11,871)       21,409 
Manufacturing                                   --              --            3,400           --          3,400
Prostatherapy                                   --              --              518           --            518
Cardiac                                         --               55             --            --             55
                                          ---------         -------       ---------      --------     ---------
          Total revenues                      7,999          10,287          18,967       (11,871)       25,382
                                          ---------         -------       ---------      --------     ---------
Costs and expenses:
Cost of services and general and
   administrative expenses:
     Lithotripsy                                --              545           5,497           --          6,042
     Manufacturing                              --             --             2,454           --          2,454
     Prostatherapy                              --             --               457           --            457
     Cardiac                                    --               61             --            --             61
     Corporate                                   29             842             --            --            871
                                          ---------         -------       ---------      --------     ---------
          Total costs and expenses               29           1,448           8,408           --          9,885
Depreciation and amortization                     2           1,206           1,267           --          2,475
                                          ---------         -------       ---------      --------     ---------
                                                 31           2,654           9,675           --         12,360
                                          ---------         -------       ---------      --------     ---------
Operating income                              7,968           7,633           9,292      (11,871)        13,022
                                          ---------         -------       ---------      --------     ---------                    
Other income (deductions):
Interest income                                 205             139              61          --             405
Interest expense                             (2,281)           --               (48)         --          (2,329)
Other, net                                     (607)            265               4          --            (338)
                                          ---------         -------       ---------      --------     ---------
          Total other income
             (deductions)                    (2,683)            404              17          --          (2,262)
                                          ---------         -------       ---------      --------     ---------
Income before provision for income
   taxes                                      5,285           8,037           9,309      (11,871)        10,760
Minority interest in consolidated
   income                                       --              --              --         5,443          5,443
Provision for income taxes                    2,123              38              (6)         --           2,155
                                          ---------         -------       ---------      --------     --------- 
          Net income                      $   3,162         $ 7,999       $   9,315     $(17,314)     $   3,162
                                          =========         =======       =========     ========      =========

</TABLE>

                                      -11-


<PAGE>



                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                   (Unaudited)
                   Condensed Consolidating Statement of Operations

                        Three Months Ended March 31, 1998

<TABLE>
<S>                                      <C>            <C>            <C>             <C>          <C>    

($ in thousands)
                                         Prime Medical   Guarantor     Non-Guarantor   Eliminating  Consolidated
                                         Services Inc.  Subsidiaries   Subsidiaries      Entries       Total
                                         -------------  ------------   ------------      -------       -----
Fee revenue:
Lithotripsy:
     Fee revenues                          $    --         $  4,805        $ 13,707     $    --       $  18,512
     Management fees                            --              677             392          --           1,069
     Equity income                            6,656           4,308            --        (10,386)           578
                                          ---------         -------       ---------      --------     ---------
                                              6,656           9,790          14,099      (10,386)        20,159 
                                          ---------         -------       ---------      --------     ---------
Manufacturing                                   --              --            2,433          --           2,433
Prostatherapy                                   --              --               83          --              83
Cardiac                                         --              120             --           --             120
                                          ---------         -------       ---------      --------     ---------
          Total revenues                      6,656           9,910          16,615      (10,386)        22,795
                                          ---------         -------       ---------      --------     ---------
Costs and expenses:
Cost of services and general and
   administrative expenses:
     Lithotripsy                                --              472           4,937          --           5,409
     Manufacturing                              --              --            1,698          --           1,698
     Prostatherapy                              --              --              108          --             108
     Cardiac                                    --              101             --           --             101
     Corporate                                   49           1,112             --           --           1,161
     Nonrecurring development
        and other costs                       1,617             --              --           --           1,617
                                          ---------         -------       ---------      --------     ---------  

          Total Cost and Expenses             1,666           1,685           6,743          --          10,094
Depreciation and amortization                     2           1,376           1,190          --           2,568
                                          ---------         -------       ---------      --------     --------- 
Operating income                              4,988           6,849           8,682      (10,386)        10,133
                                          ---------         -------       ---------      --------     ---------                    
Other income (deductions):
Interest income                                  13              59             111          --             183
Interest expense                             (1,731)            (15)            (37)         --          (1,783)
Financing costs                              (4,978)            --               (4)         --          (4,982)
Other, net                                      --              131              25          --             156
                                           ---------         -------       ---------      --------     ---------
          Total other income
             (deductions)                    (6,696)            175              95          --          (6,426)
                                          ---------         -------       ---------      --------     ---------
Income (loss) before provision for
   income taxes                              (1,708)          7,024           8,777      (10,386)         3,707
Minority interest in consolidated
   income                                       --              --              --         5,032          5,032
Provision for income taxes                     (540)            368              15          --            (157)
                                          ---------         -------       ---------      --------     --------- 
          Net income (loss)                $ (1,168)        $ 6,656        $  8,762     $(15,418)      $ (1,168)
                                           ========         =======        ========     ========       ======== 

</TABLE>

                                      -12-


<PAGE>



                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                                   (Unaudited)
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                      Condensed Consolidating Balance Sheet
                               
                                 March 31, 1999

    ($ in thousands)                                       
<TABLE>
<S>                                      <C>               <C>            <C>           <C>         <C>  
                                                                    

                                         Prime Medical      Guarantor     Non-Guarantor Eliminating Consolidated
                                         Services, Inc.    Subsidiaries   Subsidiaries   Entries       Total
                                         --------------    ------------   ------------   -------       -----



ASSETS:

Current Assets:
Cash                                      $  15,617       $   7,690       $  11,459    $     --       $  34,766
Accounts receivable, net                        --            4,558          17,975          --          22,533
Other receivables                               --            3,160             --           --           3,160
Deferred income taxes                         1,156             727             --           --           1,883
Prepaid expenses and other current assets        28             574           3,429          --           4,031
                                          ---------         -------       ---------      --------     ---------
  Total current assets                       16,801          16,709          32,863          --          66,373
                                          ---------         -------       ---------      --------     ---------

Property and equipment:
Equipment, furniture and fixtures               --            4,967          31,610          --          36,577
Building and leasehold improvements             --              499           1,582          --           2,081
Less accumulated depreciation 
  and amortization                              --           (4,588)        (16,495)         --         (21,083)
                                          ---------         -------       ---------      --------     --------- 

Property and equipment, net                     --              878          16,697          --          17,575
                                          ---------         -------       ---------      --------     ---------
Investment in subsidiaries and other        
 investments                                179,058          29,144             --      (197,182)        11,020
Goodwill, at cost, net of amortization          --          139,847             --           --         139,847
Other noncurrent assets                          48             758             --           --             806
                                          ---------         -------       ---------      --------     ---------
    Total assets                          $ 195,907       $ 187,336       $  49,560    $(197,182)     $ 235,621
                                          =========       =========       =========    =========      =========



LIABILITIES:

Current Liabilities:
Current portion of long-term debt         $     --        $     --         $    851     $    --       $     851
Accounts payable                                950           3,224             148          --           4,322
Accrued expenses                              2,193           1,530           8,636          --          12,359
                                          ---------         -------       ---------      --------     ---------
  Total current liabilities                   3,143           4,754           9,635          --          17,532
                                          ---------         -------       ---------      --------     ---------
Long-term debt, net of current portion      100,000             162           1,967          --         102,129
Deferred income taxes                         2,075           3,485             --           --           5,560
                                          ---------         -------       ---------      --------     ---------
  Total liabilities                         105,218           8,401          11,602          --         125,221
                                          ---------         -------       ---------      --------     ---------
Minority interest                               --              --              --        19,711         19,711


STOCKHOLDERS' EQUITY:

Common stock                                    194             --              --           --             194
Capital in excess of par value               87,398             --              --           --          87,398
Accumulated earnings                         21,777             --              --           --          21,777
Treasury stock                              (18,680)            --              --           --         (18,680)
Subsidiary net equity                           --          178,935          37,958     (216,893)           --
                                          ---------         -------       ---------      --------     ---------

  Total stockholders' equity                 90,689         178,935          37,958     (216,893)        90,689
                                          ---------         -------       ---------      --------     ---------   
    Total liabilities and 
       stockholders' equity               $ 195,907       $ 187,336        $ 49,560    $(197,182)     $ 235,621
                                          =========       =========        ========    =========      =========

</TABLE>




                                      -13-


<PAGE>





                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                   (Unaudited)
                 Condensed Consolidating Statement of Cash Flows


                           Three Months Ended March 31, 1999

<TABLE>
<S>                                      <C>            <C>            <C>             <C>          <C>    

              ($ in thousands)           Prime Medical   Guarantor     Non-Guarantor   Eliminating  Consolidated
                                         Services, Inc. Subsidiaries   Subsidiaries      Entries        Total
                                         -------------- ------------   ------------      -------        -----
                                                                                         



     Net cash (used) provided by
        operating activities              $  (5,503)       $ 1,947         $  6,334       $  --       $   2,778
                                          ---------         -------       ---------      --------     ---------

Cash flows from investing activities:
Purchases of equipment and leasehold
   improvements                                 --            (114)            (471)         --            (585)
Distributions from subsidiaries               7,551          4,864              --       (12,415)           --
Distributions from investments                  --           1,064              --           --           1,064
Other                                           --            (105)             571          --             466
                                          ---------         -------       ---------      --------     --------- 
     Net cash provided (used) by
        investing activities                  7,551          5,709              100      (12,415)           945
                                          ---------         -------       ---------      --------     ---------
Cash flows from financing activities:
Payments on notes payable, 
  exclusive of interest                         --             --              (406)         --            (406)
Borrowings on notes payable                     --             --             1,508          --           1,508
Distribution to minority interest               --             --               --        (9,200)        (9,200)
Contributions by minority interest              --             --             1,224          --           1,224
Purchase of treasury stock                   (2,241)           --               --           --          (2,241)
Other                                            12            --               --           --              12
Distributions to equity owners                  --          (7,551)         (14,064)      21,615            --
                                          ---------         -------       ---------      --------     ---------   
     Net cash provided (used) by
        financing activities                 (2,229)        (7,551)         (11,738)      12,415         (9,103)
                                          ---------         -------       ---------      --------     --------- 
     Net increase (decrease) in cash and
        cash equivalents                       (181)           105           (5,304)         --          (5,380)
Cash and cash equivalents at beginning
   of period                                 15,798          7,585           16,763          --          40,146
                                          ---------         -------       ---------      --------     ---------
Cash and cash equivalents at end of
   period                                 $  15,617        $ 7,690         $ 11,459       $  --       $  34,766
                                          =========        =======         ========       =======     =========



</TABLE>











                                      -14-






<PAGE>










                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                                   (Unaudited)
                 Condensed Consolidating Statement of Cash Flows


                        Three Months Ended March 31, 1998

<TABLE>
<S>                                      <C>            <C>            <C>             <C>          <C>    

              ($ in thousands)           Prime Medical  Guarantor      Non-Guarantor   Eliminating  Consolidated
                                         Services, Inc.Subsidiaries    Subsidiaries      Entries       Total
                                         --------------------------    ------------      -------       -----
                                                                                         



     Net cash (used) provided by
        operating activities              $  (5,942)     $  (5,393)       $  14,326     $    --       $   2,991
                                          ---------         -------       ---------      --------     ---------    

Cash flows from investing activities:
Purchases of equipment and leasehold
   improvements                                 --            (304)          (1,196)         --          (1,500)
Distributions from subsidiaries               3,058          4,720              --        (7,778)           --
Distributions from investments                  --             808              --           --             808
Other                                           --             (72)            (133)         --            (205)
                                          ---------         -------       ---------      --------     ---------                    
     Net cash provided (used) by
        investing activities                  3,058          5,152           (1,329)      (7,778)          (897)
                                          ---------         -------       ---------      --------     ---------
Cash flows from financing activities:
Payments on notes payable, 
     exclusive of interest                  (79,000)            (2)            (324)         --         (79,326)
Borrowings on notes payable                 100,000            --                25          --         100,025
Distribution to minority interest               --             --               --        (8,702)        (8,702)
Other                                            24            --               --           --              24
Distributions to equity owners                  --          (3,058)         (13,422)      16,480            --
                                          ---------         -------       ---------      --------     ---------                    
     Net cash provided (used) by
        financing activities                 21,024         (3,060)         (13,721)       7,778         12,021
                                          ---------         -------       ---------      --------     ---------                    
     Net increase (decrease) in cash and
        cash equivalents                     18,140         (3,301)            (724)         --          14,115
Cash and cash equivalents at beginning
   of period                                     18          6,260           17,492          --          23,770
                                          ---------         -------       ---------      --------     --------- 
Cash and cash equivalents at end of
   period                                 $  18,158      $   2,959        $  16,768     $    --       $  37,885
                                          =========      =========        =========     =========     =========
                                                 



</TABLE>











                                                           -15-



<PAGE>



                      Management's Discussion and Analysis
                           of Financial Condition and
                              Results of Operations

Revenues
--------

Total  revenues for the three months ended March 31, 1999  increased  $2,587,000
(11%) as  compared  to the same  period  in 1998.  Revenues  from  manufacturing
increased  $967,000 (40%) due to the sale of trailers for MRI  equipment,  while
the prior year  revenues  did not include any revenue  from the sale of trailers
for MRI equipment,  since AK Associates did not become  authorized  under the GE
certification  process  until mid 1998.  Revenues from  lithotripter  operations
increased  by  $1,250,000  (6%)  primarily  due  to  a  increase  in  procedures
performed.  Revenues from  prostatherapy  operations  increased  $435,000 (524%)
primarily because the California unit not becoming operational until June 1998.
Revenues  from cardiac  centers  decreased  $65,000  (54%)  primarily due to two
discontinued cardiac centers.


Expenses
--------

Costs and  expenses  (excluding  depreciation  and  amortization)  for the three
months ended March 31, 1999 decreased from 44% to 39% of revenues, primarily due
to certain nonrecurring  development and other costs of $1,617,000 recognized in
the quarter ended March 31, 1998, and decreased $209,000 (2%) in absolute terms,
compared  to the  same  period  in  1998.  Cost  of  services  and  general  and
administrative  expenses associated with manufacturing  increased $756,000 (45%)
due to the increase in MRI trailers  manufactured.  Costs of services associated
with  lithotripter  operations  increased  $633,000  (12%) in absolute terms and
increased from 27% to 28% of lithotripter revenues primarily due to the writeoff
of start up costs incurred during the quarter.  Cost of services associated with
prostatherapy  operations  increased  $349,000 (323%) due to the California unit
discussed  above.  Cost of services  associated with cardiac  centers  decreased
$40,000 (40%).  Corporate expenses were decreased from 5% to 3% of revenues,  or
$290,000  (25%),   as  the  Company  was  able  to  successfully   grow  without
proportionately  adding  overhead,  and a  reduction  in the  amounts  due under
management incentive plans.

Other Income (Deductions)
-------------------------

Other deductions for the three months ended March 31, 1999 decreased  $4,164,000
(65%)  compared to the same period in 1998,  primarily  due to  financing  costs
totaling  $4,982,000  associated with the $100 million debt offering and the $50
million  increase in the senior  revolving  credit facility were expensed in the
quarter ended March 31, 1998.  This decrease was partially  offset by a $494,000
increase  in other  deductions,  net,  primarily  due to the  writeoff  of costs
related to a proposed  acquisition that was not consumated and $546,000 increase
in  interest  expense,  due to higher  outstanding  debt  balances  in the first
quarter of 1999 compared to the same period in 1998.


Minority Interest In Consolidated Income
----------------------------------------

Minority  interest in  consolidated  income for the three months ended March 31,
1999 increased $411,000 compared to the same period in 1998, primarily due to an
increase in operating income of applicable  entities  resulting from an increase
of procedures  performed.  Earnings before  interest,  taxes,  depreciation  and
amortization  (EBITDA) attributable to minority interests was $6,603,000 for the
three months ended March 31, 1999 compared to $6,106,000  for the same period in
1998.  EBITDA  is not  intended  to  represent  net  income or cash  flows  from
operating activities in accordance with generally accepted accounting principles
and  should  not be  considered  a measure  of the  Company's  profitability  or
liquidity.

                                      -16-



<PAGE>



Provision for income taxes
--------------------------

Provision  for income taxes for the three months ended March 31, 1999  increased
$2,312,000  compared  to the same  period  in 1998 due to the loss in the  first
quarter of 1998 arising from the financing costs and  development  costs written
off.

Liquidity and Capital Resources
-------------------------------

Cash was  $34,766,000  and  $40,146,000 at March 31, 1999 and December 31, 1998,
respectively.  Cash provided by operations  for the quarter ended March 31, 1999
was  $2,778,000  compared to cash provided by  operations  for the quarter ended
March  31,  1998  in  the  amount  of  $2,991,000.  The  decline  was  primarily
attributable to higher interest expense payments.

Cash provided by investing  activities  for the quarter ended March 31, 1999 was
$945,000  compared to cash used in investing  activities  for the quarter  ended
March 31, 1998 in the amount of $897,000.  The increase was  attributable  to an
increase in distributions from equity investments and a decrease in the purchase
of equipment.  Cash used in financing activities for the quarter ended March 31,
1999 was $9,103,000 which included  distributions to minority  interest totaling
$9,200,000,  purchase  of treasury  stock of  $2,241,000  and  payments on notes
payable of $406,000,  which was partially  offset by borrowings on notes payable
of  $1,508,000  and  contributions  by  minority  interest of  $1,224,000.  Cash
provided  by  financing  activities  for the  quarter  ended  March 31, 1998 was
$12,021,000 which included  $100,025,000 in new borrowings,  which was partially
offset by  payments  on notes  payable and  distributions  to minority  interest
totaling $88,028,000.

The Company's  existing  senior credit facility is comprised of a revolving line
of credit.  The revolving line of credit has a borrowing  limit of $100 million,
none of which was drawn at March 31, 1999 and April 30, 1999.

On March 27, 1998,  the Company  completed an offering of $100 million of senior
subordinated notes due 2008 (the "Notes") to qualified institutional buyers. The
net proceeds  from the offering of  approximately  $96 million was used to repay
all  outstanding  indebtedness  under  the  Company's  bank  facility,  with the
remainder to be used for general corporate purposes, including acquisitions.  In
connection therewith, the Company recorded a charge to earnings of approximately
$4.4 million for debt issuance costs  associated with the Notes.  The Notes bear
interest at 8.75% and interest is payable semi-annually on April 1st and October
1st. Principal is due April 2008.


The  Company  intends  to  increase  the  number of its  lithotripsy  operations
primarily through acquisitions.  The Company believes that the fragmented nature
of the lithotripsy  industry,  combined with operational  challenges  created by
increasing regulatory and business complexities, including Stark II, the Illegal
Remuneration   Statute  and  similar  state  laws,   will  provide   significant
lithotripsy acquisition opportunities.  Where appropriate, the Company will seek
to  increase  its  ownership  interest  in  current  lithotripsy  operations  by
purchasing  interests of urologists and other investors who desire to divest due
to  concerns  over  regulatory  issues,  a desire  to  realize a return on their
investment or  retirement.  The Company  intends to fund the purchase  price for
future acquisitions using borrowings under its senior credit facility, remaining
proceeds  from the  offering  of the Notes and cash  flow  from  operations.  In
addition,  the Company may use shares of its common  stock in such  acquisitions
where appropriate.

                                      -17-


<PAGE>



During 1998,  the Company  announced a stock  repurchase  program of up to $25.0
million of common stock. From time to time, the Company may purchase  additional
shares  of its  common  stock  where,  in the  judgment  of  management,  market
valuations  of its  stock  do not  accurately  reflect  the  Company's  past and
projected results of operations.  The Company intends to fund any such purchases
using available cash, cash flow from operations and borrowings  under its senior
credit facility. The Company has purchased 2,249,500 shares of stock for a total
of $19,545,000 as of April 30, 1999.

The Company's ability to make scheduled  payments of principal of, or to pay the
interest on, or to  refinance,  its  indebtedness,  or to fund  planned  capital
expenditures will depend on its future performance,  which, to a certain extent,
is subject to general economic, financial, competitive,  legislative, regulatory
and other  factors that are beyond its control.  Based upon the current level of
operations and anticipated cost savings and revenue growth,  management believes
that cash flow from  operations  and available  cash,  together  with  available
borrowings  under its  senior  credit  facility,  will be  adequate  to meet the
Company's future  liquidity needs for at least the next several years.  However,
there can be no assurance that the Company's  business will generate  sufficient
cash flow  from  operations,  that  anticipated  revenue  growth  and  operating
improvements  will be realized or that future borrowings will be available under
the senior  credit  facility  in an amount  sufficient  to enable the Company to
service its indebtedness or to fund its other liquidity needs.

Impact of Inflation
-------------------

The assets of the Company are not  significantly  affected by inflation  because
the Company is not required to make large investments in fixed assets.  However,
the rate of inflation  will affect  certain of the Company's  expenses,  such as
employee compensation and benefits.

Year 2000 Compliance
--------------------

The "Year  2000 " issue  refers to the  phenomenon  whereby  computer  programs,
having been written using two digits  rather than four to define the  applicable
year, may  erroneously  recognize a date using "00" as the year 1900 rather than
the year  2000.  This  error  could  potentially  result in a system  failure or
miscalculations  causing  disruptions  of  operations,  including,  among  other
things,  a  temporary  inability  to process  transactions  or engage in similar
normal business activities.

The Company  formed a Year 2000 Committee in mid 1998. The Committee was charged
with  examining  (1)  internal  hardware  and  software  systems;   (2)  medical
equipment;  (3) physical facilities;  and (4) outside suppliers,  as these items
relate to potential  problems  that could be caused by the  inability to process
dates beyond December 31, 1999.

The  Committee  divided  its task  into  four  parts -  assessment,  remediation
planning,  implementation and testing and contingency  planning.  Assessment and
remediation  planning have been  substantially  completed for all four phases of
the project.  Implementation and testing and contingency  planning are discussed
below.

Internal hardware and software systems: The Company has completed  substantially
all of the needed upgrades to its hardware and software  systems.  The remaining
hardware and software  upgrades/replacements are expected to be complete by June
30, 1999.




                                      -18-


<PAGE>



Medical Equipment:  A review of the Company's  lithotripters has determined that
their operation is not affected  directly by the Year 2000 issue. The Company is
currently  reviewing the miscellaneous  ancillary medical equipment to determine
compliance and expects to be completed by September 30, 1999.

Physical facilities:  The Committee has evaluated its non-computer equipment and
has determined that, except for its telephone system, there are no devices whose
failure  would  materially  affect the ability to carry out the  business of the
Company.  A compliant  telephone  system is expected to be installed by June 30,
1999. The outside  managers of the Company's office buildings have reported that
all aspects of the physical  facilities - elevators,  fire and security systems,
etc. are compliant.  Their further inquiry of those supplying  public  utilities
have produced assurances of best efforts but no guarantee of performance.

Outside  suppliers:  The Company is currently  inquiring about the state of Year
2000 readiness of those outside  suppliers who were determined to be critical to
the Company's  ability to carry out its business.  This survey is expected to be
complete by June 30, 1999.

Contingency  planning:  The Company cannot be certain that it has identified and
will be successful in bringing into  compliance  all Year 2000 issues within its
control.  It can be even less  certain of critical  services  being  supplied by
third parties  beyond its control.  Upon  completion of the  implementation  and
testing phases of the plan, the Company will formalize plans for carrying on its
business in the event of unanticipated  Year 2000-related  failures.  Presently,
the Company  believes that the most reasonably  likely worst case scenario would
be a failure of relatively  short duration of basic third party services such as
the power grid.  With such a failure  the  Company's  planning  will be directed
toward a temporary suspension of operations followed by plans for resumption and
catch up operations.  Due to the magnitude of the uncertainties  related to Year
2000 issues, the Company is unable to fully assess the consequences of Year 2000
failures  and,  consequently,  there could be a material  adverse  effect on the
Company's results of operations, financial position and cash flows.

To date, the Company has not experienced  significant  costs associated with the
Year 2000 issue and does not expect significant costs to be incurred in order to
correct the Year 2000 issue.  

Forward-Looking Statements
--------------------------

The  statements  contained  in this  Report  on Form  10-Q  that are not  purely
historical are  forward-looking  statements within the meaning of Section 27A of
the  Securities  Act of 1933 and Section 21E of the  Securities  Exchange Act of
1934,  including  statements   regarding  the  Company's   expectation,   hopes,
intentions or strategies  regarding the future.  Readers  should not place undue
reliance on forward-looking  statements. All forward-looking statements included
in this document are based on  information  available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-looking
statements.  It is important to note that the  Company's  actual  results  could
differ materially from those in such forward-looking  statements. In addition to
any risks and uncertainties specifically identified in the text surrounding such
forward-looking  statements,  the reader should consult the Company's reports on
Form 10-K and other filings under the  Securities Act of 1933 and the Securities
Exchange  Act of 1934,  for factors  that could cause  actual  results to differ
materially from those presented.


                                      -19-


<PAGE>



The forward-looking  statements included herein are necessarily based on various
assumptions  and  estimates  and are  inherently  subject to  various  risks and
uncertainties,  including  risks  and  uncertainties  relating  to the  possible
invalidity of the underlying  assumptions and estimates and possible  changes or
developments  in  social,  economic,   business,  industry,  market,  legal  and
regulatory circumstances and conditions and actions taken or omitted to be taken
by  third  parties,  including  customers,   suppliers,  business  partners  and
competitors and  legislative,  judicial and other  governmental  authorities and
officials.  Assumptions related to the foregoing involve judgements with respect
to, among other things,  future economic,  competitive and market conditions and
future business  decisions,  all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company.  Any of such
assumptions  could be inaccurate and  therefore,  there can be no assurance that
the  forward-looking  statements included in this Report on Form 10-Q will prove
to be accurate.




























                                      -20-



<PAGE>










                                     PART II


                                OTHER INFORMATION





































                                      -21-


<PAGE>



Item 6.   Exhibits and Reports on Form 8-K.

(a)  Exhibits.

     12.      Computation of ratio of earnings to fixed charges

     27.      Financial Data Schedule
 
(b)  Current Reports on Form 8-K

     NONE












































                                      -22-


<PAGE>










                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                             PRIME MEDICAL SERVICES, INC.



                                                 
Date: May 17, 1999                           By: /s/ Cheryl L. Williams
                                                 ----------------------
                                                 Cheryl L. Williams, 
                                                   Vice President
                                                   and Chief Financial Officer





























                                      -23-





<PAGE>