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, 1997

            [ ] 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 28, 1997
         -------------------                   -------------------------------
   Common Stock, $.01 par value                           19,270,267




<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,
                                            ---------------------------------
                                                  1997              1996
                                            ---------------   ---------------
Fee revenue:
  Lithotripsy:
    Fee revenues                            $        19,089   $         6,069
    Management fees                                   1,351               554
    Equity income                                       320               379
                                            ---------------   ---------------
                                                     20,760             7,002
  Cardiac                                               129               222
                                            ---------------   ---------------
                                                     20,889             7,224
                                            ---------------   ---------------
Costs and expenses:
  Cost of services and general
  and administrative expense
    Lithotripsy                                       5,798             2,263
    Cardiac                                              92               159
    Corporate                                         1,362               599
                                            ---------------   ---------------
                                                      7,252             3,021

  Depreciation and amortization                       2,084             1,149
                                            ---------------   ---------------
                                                      9,336             4,170
                                            ---------------   ---------------
Operating income                                     11,553             3,054

Other income (deductions):
  Interest and dividends                                139                22
  Financing costs                                      (360)             --
  Interest expense                                   (1,764)             (509)
  Other, net                                            103                80
                                            ---------------   ---------------

                                                     (1,882)             (407)
                                            ---------------   ---------------
Income before provision for income taxes
  and minority interest                               9,671             2,647

Minority interest in consolidated income              5,865               477

Provision for income taxes                              930               264
                                            ---------------   ---------------

Net income                                  $         2,876   $         1,906
                                            ===============   ===============

Primary earnings per share:
  Net income                                $          0.15   $          0.12
                                            ===============   ===============

  Weighted average shares outstanding                19,498            16,366
                                            ===============   ===============

Fully diluted earnings per share:
  Net income                                $          0.15   $          0.12
                                            ===============   ===============

  Weighted average shares outstanding                19,498            17,368
                                            ===============   ===============

                 See notes to consolidated financial statements.
                                       -3-


<PAGE>



                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


($ in thousands)


                                                  March 31,      December 31,
                                                    1997            1996
                                                    ----            ----
ASSETS

Current assets:
  Cash                                      $        16,280   $        20,096
  Accounts receivable, less allowance
   for doubtful accounts of $512 in
   1997 and $335 in 1996                             15,697            16,346
  Other receivables                                   1,923             1,842
  Deferred income taxes                                 948               948
  Prepaid expenses and other current assets             795               841
                                            ---------------   ---------------

     Total current assets                            35,643            40,073

Property and equipment:
  Equipment, furniture and fixtures                  22,515            22,339
  Leasehold improvements                                113               113
                                            ---------------   ---------------

                                                     22,628            22,452

Less accumulated depreciation and
  amortization                                       (8,124)           (7,122)
                                            ---------------   ---------------

     Property and equipment, net                     14,504            15,330


Investment in American Physicians
  Service Group, Inc.                                   173               173
Other investments                                     7,829             7,927
Goodwill, at cost, net of amortization              140,656           132,302
Other noncurrent assets                               2,082             1,948
                                            ---------------   ---------------

                                            $       200,887   $       197,753
                                            ===============   ===============













          See accompanying notes to consolidated financial statements.
                                        4


<PAGE>



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


($ in thousands)


                                                 March 31,       December 31,
                                                   1997              1996
                                                   ----              ----
LIABILITIES:

Current Liabilities:

  Current portion of long-term debt         $        10,524   $        10,522
  Accounts payable                                    3,263             4,451
  Accrued expenses                                   10,218            16,582
                                            ---------------   ---------------

     Total current liabilities                       24,005            31,555

Long-term debt, net of current portion               78,817            70,910
Deferred income taxes                                 5,736             5,423
                                            ---------------   ---------------

     Total liabilities                              108,558           107,888

Minority interest                                    12,391            13,438

STOCKHOLDERS' EQUITY:

Preferred stock, $.01 par value,
  1,000,000 shares authorized;
  none outstanding                                       --                --
Common stock, $.01 par value,
  40,000,000 shares authorized;
  19,260,267 issued in 1997 and
  19,078,933 issued in 1996                             193               191
Capital in excess of par value                       83,904            83,271
Accumulated deficit                                  (4,159)           (7,035)
                                            ---------------   ---------------

     Total stockholders' equity                      79,938            76,427
                                            ---------------   ---------------

                                            $       200,887   $       197,753
                                            ===============   ===============














          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,
                                           1997              1996
                                      ---------------   ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Fee and other revenue collected       $        21,322   $         7,457
Cash paid to employees, suppliers
  of goods and others                          (9,166)           (3,676)
Interest received                                 139                22
Interest paid                                  (2,174)             (505)
Income taxes paid                                (625)             (226)
                                      ---------------   ---------------
     Net cash provided by
     operating activities                       9,496             3,072
                                      ---------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on lithotripter 
  entities acquired                           (10,503)           (3,387)
Purchase of equipment and
  leasehold improvements                         (216)             (229)
Distributions from investments                    557               646
Purchase of investments                          (129)             --
Other                                            (141)             (101)
                                      ---------------   ---------------
     Net cash (used in)
     investing activities                     (10,432)           (3,071)
                                      ---------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable                    50,000              --
Payments on notes payable, 
  exclusive of interest                       (42,091)           (1,138)
Distributions to minority interest            (11,040)             (369)
Exercise of stock options                         251               130
                                      ---------------   ---------------
     Net cash (used in)
     financing activities                      (2,880)           (1,377)
                                      ---------------   ---------------

NET (DECREASE) IN CASH AND CASH
     EQUIVALENTS                               (3,816)           (1,376)

Cash and cash equivalents, 
     beginning of period                       20,096             4,692
                                      ---------------   ---------------

Cash and cash equivalents, 
     end of period                    $        16,280   $         3,316
                                      ===============   ===============







                 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,
                                            1997              1996
                                      ---------------   ---------------
Reconciliation of net income to
  cash provided by operating activities
   Net income                         $         2,876   $         1,906

Adjustments to reconcile net income 
  to cashprovided by operating activities:
     Minority interest in 
     consolidated income                        5,865               477
     Depreciation and amortization              2,084             1,150
     Provision for deferred income taxes          313              --
     Provision for uncollectible accounts          60                35
     Equity in earnings of affiliates            (321)             (382)
     Other                                         39              --

Changes in operating assets and liabilities, 
  net of effect of purchase transactions:
     Accounts receivable                          589               499
     Other receivables                            (80)             (139)
     Other current assets                          46               206
     Accounts payable                          (1,187)             (301)
     Accrued expenses                            (788)             (379)
                                      ---------------   ---------------

     Total adjustments                          6,620             1,166
                                      ---------------   ---------------

     Net cash provided by
     operating activities             $         9,496   $         3,072
                                      ===============   ===============


















                 See notes to consolidated financial statements
                                       -7-


<PAGE>



                          PRIME MEDICAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997
                                   (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, 1996 and  reflect all  adjustments
which are, in the opinion of  management,  necessary for a fair statement of the
financial  position as of March 31, 1997 and the results of  operations  for the
periods  presented.  These  statements  have not been audited or reviewed 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,  1996  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 March 1997, The Company increased its credit facility by $45 million. The $40
million  term loan was  funded,  and  $37,750,000  was used to repay the line of
credit.  Loan fees of $585,000 associated with the credit facility increase were
expensed in March 1997 on the consolidated statements of operations.

Additional  paid in capital was increased and current federal income tax payable
was decreased by $383,000  related to the permanent tax difference  arising from
the exercise of stock options in the quarter ended March 31, 1997.






















                                       -8-




<PAGE>




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

Results of Operations
---------------------

Revenues
--------

         Total  revenues  for the three  months  ended March 31, 1997  increased
$13,665,000  (189%)  as  compared  to the same  period  in 1996.  Revenues  from
lithotripter   operations   increased  by  $13,758,000   primarily  due  to  the
acquisition of an entity that owned or managed 31 lithotripters effective May 1,
1996.  Revenues  from cardiac  centers  decreased  $93,000  primarily due to one
discontinued/sold cardiac center.

Expenses
--------

         Costs and expenses for the three months ended March 31, 1997  decreased
from 42% to 35% of revenues,  but increased $4,231,000 (140%) in absolute terms,
compared  to the  same  period  in  1996.  Costs  of  services  associated  with
lithotripter  operations  increased  $3,535,000  (156%)  in  absolute  terms but
decreased  from  32%  to  28%  of  lithotripter  revenues  primarily  due to the
acquisition  discussed above.  Cost of services  associated with cardiac centers
decreased  $67,000  (42%)  primarily due to one sold cardiac  center.  Corporate
expenses  were  decreased  from 8% to 7% of  revenues as the Company was able to
successfully grow without  proportionately adding overhead..  Corporate expenses
increased  $763,000 (127%)  primarily due to the additional  corporate  expenses
associated  with the acquisition  discussed  above and the management  incentive
plans tied to the performance of the Company.

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

         Other  deductions  for the three months ended March 31, 1997  increased
$1,475,000  compared  to the same  period  in 1996,  primarily  due to  interest
expense  increased  $1,255,000  due to  $74,000,000  in new  borrowings  in 1996
primarily for the acquisition of Lithotripters,  Inc. effective May 1, 1996. The
Company  expensed  $360,000  in loan fees  associated  with the  increase in the
credit facility in the quarter ended March 31, 1997.


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

         Minority  interest in  consolidated  income for the three  months ended
March  31,  1997  increased  $5,388,000  compared  to the same  period  in 1996,
primarily due to the minority  interest  associated  with the 21 partnerships in
which Lithotripters, Inc. holds a controlling interest. The Company acquired all
of the stock of Lithotripters, Inc.
effective May 1, 1996.


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

         Cash was $16,280,000 and $20,096,000 at March 31, 1997 and December 31,
1996, respectively.  Cash provided by operations for the quarter ended March 31,
1997 was  $9,496,000  compared to cash  provided by  operations  for the quarter
ended March 31, 1996 in the amount of $3,072,000.






                                       -9-


<PAGE>

Liquidity and Capital Resources (continued)
-------------------------------

Cash used in  investing  activities  for the  quarter  ended  March 31, 1997 was
$10,432,000  compared to cash used in investing activities for the quarter ended
March 31, 1996 in the amount of  $3,071,000.  The increase was  attributable  to
acquisition of additional partnership interests of $10,503,000 in January, 1997.
Cash used in  financing  activities  for the  quarter  ended  March 31, 1997 was
$2,880,000  which  included  $42,091,000  for  payments  on  notes  payable  and
distributions to minority interest totaling  $11,040,000,  offset by $50,000,000
in new borrowings. Cash used in financing activities for the quarter ended March
31, 1996 was $1,377,000 which included  $1,138,000 for payments on notes payable
and distributions to minority interest totaling $369,000.

The Company  increased its credit facility by $45 million on March 31, 1997. The
total  facility  of $135  million  consists of a $50  million  revolving  credit
facility  due in April 2001, a $45 million  term loan with  quarterly  principal
payments, and a $40 million term loan with annual principal payments of $800,000
and a balloon payment of $36 million in April 2003.

Management  believes  that  its  present  cash  position,  together  with  funds
generated from  operations,  and from its available credit facility will provide
sufficient  resources  to meet  the  Company's  cash  requirements  for  current
operations and facilitate additional acquisitions.




































                                      -10-


<PAGE>

















                                     PART II


                                OTHER INFORMATION























                                      -11-


<PAGE>



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

(a)      Exhibits.

         11.      Statement regarding computation of per share earnings.

(b)      Current Reports on Form 8-K

         NONE










































                                      -12-



<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:    April 30, 1997                     By: /s/ Cheryl L. Williams
                                               ------------------------
                                            Cheryl L. Williams, Vice President
                                                 and Chief Financial Officer


































                                      -13-




<PAGE>