--------------------------------------------------------------------------------
                                  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, 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 equity, as of the latest practicable date.



                                             Number of Shares Outstanding at
     Title of Each Class                               July 15, 1997
     -------------------                               -------------
Common Stock, $.01 par value                             19,293,267





--------------------------------------------------------------------------------


<PAGE>















                                     PART I


                              FINANCIAL INFORMATION







































                                       -2-


<PAGE>



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

($ in thousands, except per share data)
<TABLE>
                                    Three Months Ended                  Six Months Ended
                                         June 30,                             June 30,
                                 1997              1996              1997              1996
                            ---------------   ---------------   ---------------   ---------------
<S>                         <C>               <C>               <C>               <C>

Fee revenue:
Lithotripsy:
   Fee revenues             $        20,643   $        17,044   $        39,732   $        23,113
   Management fees                    1,794             1,060             3,145             1,614
   Equity income                        661               372               981               751
                            ---------------   ---------------   ---------------   ---------------
                                     23,098            18,476            43,858            25,478
Cardiac                                 122               219               251               441
                            ---------------   ---------------   ---------------   ---------------
                                     23,220            18,695            44,109            25,919
                            ---------------   ---------------   ---------------   ---------------
Costs and expenses:
Cost of services and general
 and administrative expense
   Lithotripsy                        6,526             4,728            12,324             6,991
   Cardiac                               70               166               162               325
   Corporate                          1,476             1,362             2,838             1,961
                            ---------------   ---------------   ---------------   ---------------
                                      8,072             6,256            15,324             9,277

Depreciation and 
  amortization                        2,064             1,851             4,148             3,000
                            ---------------   ---------------   ---------------   ---------------
                                     10,136             8,107            19,472            12,277
                            ---------------   ---------------   ---------------   ---------------

Operating income                     13,084            10,588            24,637            13,642

Other income (deductions):
   Interest and dividends               156                29               295                51
   Interest expense                  (1,979)           (1,467)           (3,743)           (1,976)
   Financing costs                     --              (3,535)             (360)           (3,535)
   Other, net                            50               118               153               198
                            ---------------   ---------------   ---------------   ---------------
                                     (1,773)           (4,855)           (3,655)           (5,262)
                            ---------------   ---------------   ---------------   ---------------

Minority interest in
  consolidated income                 6,470             5,765            12,335             6,242

Income before provision 
  for income taxes                    4,841               (32)            8,647             2,138

Provision for income taxes            1,171               321             2,101               585
                            ---------------   ---------------   ---------------   ---------------

Net income                  $         3,670   $          (353)  $         6,546   $         1,553
                            ===============   ===============   ===============   ===============

Primary earnings per share:
  Net income                $          0.19   $         (0.02)  $          0.34   $          0.09
                            ===============   ===============   ===============   ===============

  Weighted average shares 
  outstanding                        19,514            18,752            19,498            17,426
                            ===============   ===============   ===============   ===============

Fully diluted earnings per share:
  Net income                $          0.19   $         (0.02)  $          0.34   $          0.09
                            ===============   ===============   ===============   ===============

  Weighted average shares 
  outstanding                        19,517            19,142            19,498            18,317
                            ===============   ===============   ===============   ===============


</TABLE>

                 See notes to consolidated financial statements.
                                       -3-



<PAGE>



                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS 
($ in thousands)                         June 30,      December 31,            
                                           1997            1996
                                    ---------------   ---------------


ASSETS

Current assets:
  Cash                              $        13,708   $        20,096
  Accounts receivable, less allowance
   for doubtful accounts of $584 in
   1997 and $335 in 1996                     16,501            16,346
  Other receivables                           1,424             1,842
  Deferred income taxes                         776               948
  Prepaid expenses and 
   other current assets                         964               841
                                    ---------------   ---------------

     Total current assets                    33,373            40,073

Property and equipment:
  Equipment, furniture and fixtures          23,077            22,339
  Leasehold improvements                        113               113
                                    ---------------   ---------------

                                             23,190            22,452

Less accumulated depreciation and
  amortization                               (9,096)           (7,122)
                                    ---------------   ---------------

    Property and equipment, net              14,094            15,330


Other investments                            11,645             8,100
Goodwill, at cost, 
  net of amortization                       142,024           132,302
Other noncurrent assets                       2,308             1,948
                                    ---------------   ---------------

                                    $       203,444   $       197,753
                                    ===============   ===============

















          See accompanying notes to consolidated financial statements.
                                       -4-


<PAGE>



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


($ in thousands)

                                          June 30        December 31
                                           1997              1996
                                    ---------------   ---------------
LIABILITIES:

Current Liabilities:

  Current portion of long-term debt $         9,951   $        10,522
  Accounts payable                            6,203             4,451
  Accrued expenses                            6,359            16,582
                                    ---------------   ---------------

     Total current liabilities               22,513            31,555

Long-term debt, net of 
  current portion                            76,374            70,910
Deferred income taxes                         6,046             5,423
                                    ---------------   ---------------

     Total liabilities                      104,933           107,888

Minority interest                            14,779            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;
  19,290,267 issued in 1997 and
  19,078,933 issued in 1996                     193               191
Capital in excess of par value               84,028            83,271
Accumulated deficit                            (489)           (7,035)
                                    ---------------   ---------------


     Total stockholders' equity              83,732            76,427
                                    ---------------   ---------------

                                    $       203,444   $       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)


                                         Six Months Ended June 30,
                                           1997              1996
                                    ---------------   ---------------
    
CASH FLOWS FROM OPERATING ACTIVITIES:
 Fee and other revenue collected    $        43,135   $        24,314
 Cash paid to employees, suppliers
   of goods and others                      (16,366)          (12,092)
 Interest received                              293                52
 Interest paid                               (3,754)           (1,850)
 Income taxes paid                             (415)             (562)
                                    ---------------   ---------------
     Net cash provided by
     operating activities                    22,893             9,862
                                    ---------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of lithotripter operations        (13,980)          (63,884)
 Deferred payments on lithotripter 
   entities acquired                            --             (3,387)
 Purchase of equipment and
   leasehold improvements                      (474)             (654)
 Distributions from investments               1,051             1,175
 Purchase of investments                       (129)             --
 Other                                         (112)               57
                                    ---------------   ---------------
     Net cash (used in)
     investing activities                   (13,644)          (66,693)
                                    ---------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Borrowings on notes payable                 50,010            70,500
 Payments on notes payable, 
   exclusive of interest                    (45,148)           (4,645)
 Distributions to minority interest         (20,779)           (4,876)
 Exercise of stock options                      280               337
                                    ---------------   ---------------
     Net cash (used in)
     financing activities                   (15,637)           61,316
                                    ---------------   ---------------

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                        (6,388)            4,485

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

Cash and cash equivalents, 
 end of period                      $        13,708   $         9,177
                                    ===============   ===============













                 See notes to consolidated financial statements
                                       -6-


<PAGE>



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

($ in thousands)


                                         Six Months Ended June 30,
                                           1997              1996
                                    ---------------   ---------------
Reconciliation of net income to
  cash provided by operating activities
   Net income                       $         6,547   $         1,553

Adjustments to reconcile net income 
  to cash provided by operating
  activities:
     Minority interest in 
      consolidated income                    12,335             6,243
     Depreciation and amortization            4,148             3,000
     Provision for deferred income taxes        667               158
     Provision for uncollectible accounts       107                84
     Equity in earnings of affiliates          (980)             (755)
     Writeoff loan fees                        --                 696
     Other                                       38              --

     Changes in operating assets and 
       liabilities, net of effect of
       purchase transactions:
          Accounts receivable                  (263)           (1,125)
          Other receivables                     419               279
          Other current assets                 (142)              505
          Accounts payable                     (927)             (474)
          Accrued expenses                      944              (302)
                                    ---------------   ---------------

          Total adjustments                  16,346             8,309
                                    ---------------   ---------------

          Net cash provided by
          operating activities      $        22,893   $         9,862
                                    ===============   ===============





















                 See notes to consolidated financial statements
                                       -7-


<PAGE>



                          PRIME MEDICAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 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 June 30, 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.       Acquisitions:
         -------------

Effective May 1, 1997 the Company  purchased a 38.25%  interest in a partnership
that operates a mobile  lithotripter  in Tennessee and Georgia for $3,470,000 in
cash. This was accounted for using the purchase method of accounting.

Effective  June 1, 1997,  the Company  purchased  100% of the stock in a Company
that operates a fixed site lithotripter in Washington and a mobile  lithotripter
that operates in California and Oregon.  The purchase  price is $1,339,000  cash
plus future  payments based on annual  revenues  during the next two years.  The
cash purchase price wasn't funded until July, 1997. This was accounted for using
the purchase method of accounting.

3.  Issuance of  Statement  of Financial  Accounting  Standards  (SFAS) No. 128,
    "Earnings Per Share".
    ----------------------------------------------------------------------------

In February,  1997, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards (SFAS) No. 128, "Earnings Per Share",  which is
effective  for  interim  period and annual  financial  statements  ending  after
December 15, 1997.  Early  adoption of the statement is not permitted. SFAS No.
128 is designed to improve the EPS information  provided in financial statements
by simplifying the existing  computational  guidelines,  revising the disclosure
requirements  and increasing the  comparability  of EPS data on an international
basis.  The Company  believes  that  adoption of the  statement  will not have a
material effect on its earnings per share disclosure.


























                                       -8-


<PAGE>



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





Results of Operations
---------------------
Revenues
--------
For the six months ended June 30, 1997,  total  revenues  increased  $18,190,000
(70%)  as  compared  to the same  period  in 1996.  Revenues  from  lithotripter
operations increased by $18,380,000  primarily due to the acquisition of (1) one
lithotripter  entity that owned or managed thirty-one  lithotripters  throughout
the U.S. in April 1996, (2) purchase of additional  interest in 10  partnerships
in January, 1997, (3) one lithotripter entity that owned two lithotripters,  and
(4) 38.25% interest in a lithotripter  operation that operated one lithotripter.
Revenues  from cardiac  centers  decreased  $190,000  primarily  due to one sold
cardiac center.

For the three months ended June 30, 1997,  total revenues  increased  $4,525,000
(24%)  as  compared  to the same  period  in 1996.  Revenues  from  lithotripter
operations increased by $4,622,000  primarily due to the acquisitions  discussed
above. Revenues from cardiac centers decreased $97,000 primarily due to one sold
cardiac center.

Expenses  
--------  

For the six months ended June 30, 1997, costs and expenses decreased from 36% to
34% of revenues,  but increased $6,047,000 (65%) in absolute terms,  compared to
the  same  period  in 1996.  Costs  of  services  associated  with  lithotripter
operations  increased  $5,333,000 (76%) in absolute terms and from 27% to 28% of
lithotripter revenues primarily due to the acquisitions discussed above. Cost of
services  associated with cardiac centers decreased $163,000 (50%) primarily due
to one  sold  cardiac  center.  Corporate  expenses  decreased  from 8% to 6% of
revenues as the Company was able to  successfully  grow without  proportionately
adding overhead.  Corporate  expenses  increased $877,000 (43%) primarily due to
the additional  corporate  expenses  associated with the acquisitions  discussed
above,  management  incentive  plans tied to the  performance of the Company and
transition expenses associated with the integration of the corporate offices.

For the three months ended June 30, 1997, costs and expenses  increased from 33%
to 35% of revenues and increased $1,816,000 (29%) in absolute terms, compared to
the  same  period  in 1996.  Costs  of  services  associated  with  lithotripter
operations  increased  $1,798,000 (38%) in absolute terms and increased from 26%
to 28% of  lithotripter  revenues due to the  acquisitions  discussed  above and
restructuring  of the  regional  operations.  Cost of services  associated  with
cardiac  centers  decreased  $96,000  (58%)  primarily  due to one sold  cardiac
center.  Corporate expenses  decreased from 7% to 6% of revenues,  and increased
$114,000 (8%) in absolute terms, due to the reasons discussed above.

Other Income (Deductions)
-------------------------
For the six months ended June 30, 1997,  other deductions  decreased  $1,607,000
primarily  due to the  Company  expensing  in 1996  $2,735,000  in fees  paid to
lenders to obtain  financing,  and  $800,000 in fees  associated  with the stock
offering that was postponed in July,  1996. This was offset by interest  expense
increase of  $1,767,000  due to higher debt  balances in 1997 as a result of the
acquisitions discussed above.

For the three months ended June 30, 1997, other deductions  decreased $3,082,000
primarily due to the reasons discussed above.







                                       -9-




<PAGE>



Liquidity and Capital Resources
-------------------------------
Cash was  $13,708,000  and  $20,096,000  at June 30, 1997 and December 31, 1996,
respectively. Cash provided by operations for the six months ended June 30, 1997
was $22,893,000 compared to cash provided by operations for the six months ended
June 30, 1996 in the amount of $9,862,000.

Cash used in  investing  activities  for the six months  ended June 30, 1997 was
$13,980,000  compared to cash used in  investing  activities  for the six months
ended June 30, 1996 in the amount of  $63,884,000.  In 1997,  the  Company  used
$13,980,000 to purchase (1) additional interests in 10 partnerships, (2) 100% of
the stock of a company  that  operates  two units and (3) 38.25%  interest  in a
lithotripter operation that operates one lithotripter. In 1996, the Company used
$63,884,000 to acquire the  acquisition of a lithotripter  entity,  that owns or
manages 31  lithotripters.  In  addition,  the Company  paid out  $3,387,000  in
deferred payments on lithotripter entities acquired previously.

Cash used in  financing  activities  for the six months  ended June 30, 1997 was
$15,637,000, primarily due to distributions to minority interests of $20,779,000
offset by new  borrowings  of  $50,010,000  less  payments  on notes  payable of
$45,148,000. Cash provided by financing activities for the six months ended June
30, 1996 was $61,316,000, which included $70.5 million in new borrowings for the
acquisition  discussed above,  offset by $4,876,000 in distributions to minority
interest partners and $4,645,000 in payments on notes payable.

The Company has utilized a  substantial  amount of cash for  acquisitions  since
1992.  Management  believes that its present cash position,  together with funds
generated from operations,  will provide  sufficient  resources to meet its cash
requirements  for  current   operations.   The  Company  expects  to  facilitate
additional  acquisitions  through  cash flow,  the  issuance  of seller debt and
outside debt financing.

































                                      -10-





<PAGE>















                                     PART II


                                OTHER INFORMATION










































                                      -11-


<PAGE>





Item 4.  Submission of Matters to a Vote of Security Holders.
         ----------------------------------------------------
         On June 18, 1997 an annual meeting of the  shareholders  of the Company
         was held to consider and vote on: 

         1) Election of eight directors to the board of  directors;  
         
         The nominees for director were:
               Paul Butrus, William E. Foree, M.D., Joseph Jenkins, M.D., J.D.,
               Irwin Katz, J.A. McEntire IV, William A. Searles, 
               Kenneth S. Shifrin, and Michael J. Spalding, M.D.
          Proxies for this meeting were solicited pursuant to Regulation 14
          under the Act and all nominees were elected.

          2) Amendment to the  Company's  1993 Stock Option Plan increasing the
          aggregate number of shares to be issued by 500,000.

         There were 13,795,508 affirmative votes and 1,861,553 negative votes
         received for this amendment.

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:    July 28, 1997                      By: /s/ Cheryl Williams
                                                ________________________
                                                Cheryl Williams
                                                Chief Financial Officer









































                                      -13-




<PAGE>