--------------------------------------------------------------------------------
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              --------------------

                                    FORM 10-Q

             [X] Quarterly Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                For the quarterly period ended September 30, 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 of 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                                October 15, 1997
   -------------------                                ----------------
Common Stock, $.01 par value                              19,306,267


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





<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                  Nine Months Ended
                                                              September  30,                     September 30,
                                                              --------------                     -------------
                                                         1997             1996             1997             1996
                                                        -----            -----            -----            -----
<S>                                                    <C>              <C>              <C>               <C>
Fee revenue:
     Lithotripsy:
          Fee revenues                                 $23,429          $22,118          $63,161           $45,231
          Management fees                                1,702            1,485            4,847             3,099
          Equity income                                    695              496            1,676             1,247
                                                     ---------          -------        ---------          --------
                                                        25,826           24,099           69,684            49,577
     Manufacturing                                         401               --              401                --
     Cardiac                                               120              201              371               642
     Practice management                                    14               --               14                --
                                                    ----------         --------         --------          --------
                                                        26,361           24,300           70,470            50,219
                                                    ----------         --------         --------          --------
Costs and expenses:
     Cost of services and general
          and administrative expense
          Lithotripsy                                    6,461            6,278           18,785            12,956
          Manufacturing                                    345               --              345                --
          Cardiac                                           80              162              242               487
          Practice management                              116               --              116                --
          Corporate                                      1,375            1,363            4,213             3,324
                                                     ---------         --------         --------           -------
                                                         8,377            7,803           23,701            16,767

    Depreciation and amortization                        2,129            2 286            6,277             5,286
                                                     ---------         --------         --------           -------
                                                        10,506           10,089           29,978            22,053
                                                     ---------          -------          -------           -------

Operating income                                        15,855           14,211           40,492            28,166

Other income (deductions):
         Interest and dividends                            212               35              507                86
         Interest expense                               (1,859)          (1,922)          (5,602)           (4,211)
         Loan fees and stock offering costs                 --               --             (360)           (3,535)
         Other, net                                        (82)             200               71               398
                                                     ----------       ---------        ---------         ---------
                                                        (1,729)          (1,687)          (5,384)           (7,262)
                                                     ----------       ---------        ---------         ---------
Income before provision for income taxes
         and minority interest                          14,126           12,524           35,108            20,904

Minority interest in consolidated income                 7,680            7,716           20,015            13,958

Provision for income taxes                               1,926              791            4,027             1,376
                                                     ----------       ---------        ---------          --------

Net income                                             $ 4,520          $ 4,017         $ 11,066           $ 5,570
                                                     =========        =========        =========          ========

Primary earnings per share:
     Net income                                       $   0.23         $   0.21         $   0.57           $  0.31
                                                      ========         ========        =========          ========

     Weighted average shares outstanding                19,566           19,515           19,550            18,120
                                                      ========         ========        =========          ========

Fully diluted earnings per share:
     Net income                                       $   0.23         $   0.21         $   0.56          $   0.31
                                                      ========         ========        =========          ========

     Weighted average shares outstanding                19,626           19,515           19,613            18,478
                                                      ========         ========        =========          ========
</TABLE>

                 See notes to consolidated financial statements.
                                       -3-


<PAGE>




                  PRIME MEDICAL SERVICES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


($ in thousands)


                                                 September 30,      December 31,
                                                     1997               1996
                                                     ----               ----


ASSETS

Current assets:
     Cash                                           $18,792           $20,096
     Accounts receivable, less allowance
       for doubtful accounts of $801 in
       1997 and $335 in 1996                         18,271            16,346
     Other receivables                                1,640             1,842
     Deferred income taxes                            1,043               948
     Prepaid expenses and other current assets        1,494               841
                                                   ---------        ---------

          Total current assets                       41,240            40,073

Property and equipment:
     Equipment, furniture and fixtures               24,288            22,339
     Leasehold improvements                             113               113
                                                   --------          --------

                                                     24,401            22,452

Less accumulated depreciation and
     amortization                                  ( 10,029)           (7,122)
                                                   --------           -------

     Property and equipment, net                     14,372            15,330



Other investments                                    11,904             8,100
Goodwill, at cost, net of amortization              145,176           132,302
Other noncurrent assets                               2,362             1,948
                                                   --------          --------
                                                   $215,054          $197,753
                                                   ========          ========















          See accompanying notes to consolidated financial statements.
                                       -4-


<PAGE>



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


($ in thousands)

                                                September 30,       December 31,
                                                    1997                1996
                                                    ----                ----

LIABILITIES:

Current Liabilities:

  Current portion of long-term debt                 $11,170           $10,522
  Accounts payable                                    3,761             4,451
  Accrued expenses                                   15,094            16,582
                                                   --------          --------

     Total current liabilities                       30,025            31,555

Long-term debt, net of current portion               73,556            70,910
Deferred income taxes                                 6,528             5,423
                                                    -------          --------

     Total liabilities                              110,109           107,888

Minority interest                                    16,614            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;
  19,306,267 issued in 1997 and
  19,078,933 issued in 1996                             193               191
Capital in excess of par value                       84,105            83,271
Accumulated earnings (deficit)                        4,033           ( 7,035)
                                                  ---------        ----------

     Total stockholders' equity                      88,331            76,427
                                                  ---------         ---------

                                                   $215,054          $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)

                                                Nine Months Ended September 30,
                                                   1997                  1996
                                                   ----                  ----

CASH FLOWS FROM OPERATING ACTIVITIES:
  Fee and other revenue collected                   $67,273        $   49,276
  Cash paid to employees, suppliers
       of goods and others                          (23,900)          (20,069)
  Interest received                                     502                86
  Interest paid                                      (5,666)           (3,296)
  Income taxes paid                                    (499)             (702)
                                                -----------        ----------
         Net cash provided by
         operating activities                        37,710            25,295
                                                -----------        ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of lithotripter operations               (15,335)          (63,884)
  Deferred payments on lithotripter 
          entities acquired                              --            (3,387)
  Purchase of equipment and
         leasehold improvements                      (1,667)           (1,071)
  Proceeds from sales of equipment                       25                --
  Distributions from investments                      1,798             1,751
  Contributions to investments                         (311)               -- 
  Other                                                (217)             (172)
                                                 ----------        ----------
         Net cash (used in)
         investing activities                       (15,707)          (66,763)
                                                 ----------        ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on notes payable                        50,959            72,000
  Payments on notes payable, 
          exclusive of interest                     (47,696)          (12,696)
  Distributions to minority interest                (27,728)          (12,409)
  Contributions by minority interest                    815                --
  Exercise of stock options                             343               337
                                                 ----------        ----------
         Net cash provided by (used in)
         financing activities                       (23,307)           47,232
                                                 ----------        ----------

NET INCREASE (DECREASE) IN CASH AND 
     CASH EQUIVALENTS                                (1,304)            5,764

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

Cash and cash equivalents, end of period         $   18,792        $   10,456
                                                 ==========        ==========










                 See notes to consolidated financial statements
                                       -6-


<PAGE>



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

($ in thousands)


                                               Nine  Months Ended September 30,
                                                     1997               1996
                                                     ----               ----
Reconciliation of net income to
  cash provided by operating activities
    Net income                                   $   11,066        $    5,570

    Adjustments to reconcile net income 
      to  cash   provided  by  operating
      activities:
       Minority interest in consolidated income      20,015            13,957
            Depreciation and amortization             6,277             5,286
            Provision for deferred income taxes         882               633
            Provision for uncollectible accounts        362               290
            Equity in earnings of affiliates         (1,701)           (1,253)
            Other                                        66               696

            Changes in  operating  assets  
             and  liabilities,  net of  effect  of
             purchase transactions:
                    Accounts receivable              (1,975)             (228)
                    Other receivables                   217               342
                    Other current assets               (320)              700
                    Accounts payable                   (691)             (485)
                    Accrued expenses                  3,512              (213)
                                                 ----------        ----------

                    Total adjustments                26,644            19,725
                                                 ----------        ----------

                  Net cash provided by
                    operating activities         $   37,710        $   25,295
                                                 ==========        ==========




















                 See notes to consolidated financial statements
                                       -7-


<PAGE>



                          PRIME MEDICAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 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 September 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.       Acquisition:
--       ------------------

In October 1997, the Company purchased a 75% equity interest in an Illinois
company that primarily  manufactures and refurbishes trailers for mobile medical
equipment.  The purchase price was $4,761,000 in cash and the potential of up to
$1,050,000 to be paid in 1999 based on certain performance criteria in 1998. The
purchase was effective  September 1, 1997.  This  acquisition  was accounted for
using the purchase method of accounting.

Revenue from  contracts  for the  manufacture  or  refurbishment  of trailers is
recognized using the percentage of completion method.



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  nine  months  ended  September  30,  1997,  total  revenues  increased
$20,251,000  (40%)  as  compared  to the same  period  in  1996.  Revenues  from
lithotripter   operations   increased  by  $20,107,000   primarily  due  to  the
acquisition  of (1) one  lithotripter  entity  that owned or managed  thirty-one
lithotripters  throughout the U.S. effective May, 1996, (2) additional  interest
in 10 partnerships in January 1997, (3) one company that owned two lithotripters
effective June 1997 and (4) 38.25% interest in a lithotripter unit effective May
1997.  Revenues from trailer  operations were $401,000.  (See Subsequent  Events
note on page 8.)Revenues from cardiac centers decreased  $271,000  primarily due
to one sold cardiac center.

For the  three  months  ended  September  30,  1997,  total  revenues  increased
$2,061,000  (8%)  as  compared  to  the  same  period  in  1996.  Revenues  from
lithotripter   operations   increased  by   $1,727,000   primarily  due  to  the
acquisitions  discussed above.  Revenues from trailer  operations were $401,000.
(See Subsequent Events note on page 8.)

Expenses
--------

For the nine months ended September 30, 1997, costs and expenses  increased from
33% to 34% of  revenues,  and  increased  $6,934,000  (41%) in  absolute  terms,
compared  to the  same  period  in  1996.  Costs  of  services  associated  with
lithotripter  operations  increased  $5,829,000 (45%) in absolute terms and from
26% to 27% of lithotripter revenues primarily due to the acquisitions  discussed
above.  Expenses from trailer  operations were $345,000.  (See Subsequent Events
note on page 8.) Cost of services  associated  with  cardiac  centers  decreased
$245,000  (50%)  primarily due to one sold cardiac  center.  Corporate  expenses
decreased from 7% to 6% of revenues as the Company was able to successfully grow
without  proportionately adding overhead.  Corporate expenses increased $889,000
(27%)  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.

For the three months ended  September 30, 1997,  costs and expenses  remained at
32% of revenues,  but increased $574,000 (7%) in absolute terms, compared to the
same period in 1996. Costs of services  associated with lithotripter  operations
increased  $183,000 (3%) in absolute terms for the reasons  described  above and
decreased  from 26% to 25% of  lithotripter  revenues .  Expenses  from  trailer
operations  were  $345,000.  (See  Subsequent  Events  note on page  8.) Cost of
services  associated with cardiac centers  decreased $82,000 (51%) primarily due
to one  sold  cardiac  center.  Corporate  expenses  decreased  from 6% to 5% of
revenues,  and  increased  $12,000  (1%) in absolute  terms,  due to the reasons
discussed above.

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

For the nine  months  ended  September  30,  1997,  other  deductions  decreased
$1,878,000  primarily due to the 1996 other deductions total included $3,535,000
in loan fees and stock offering costs, which only $360,000 have been recorded in
1997, and offset by an interest expense  increased  $1,391,000 due to borrowings
in 1997 primarily related to the acquisitions discussed above.

For the three  months  ended  September  30, 1997,  other  deductions  increased
$42,000 primarily due to a decline in other, net, which represents  nonrecurring
collections  in 1996 on amounts  that had been  written  off in 1995,  offset by
additional interest income earned on short-term excess cash.






                                       -9-







<PAGE>



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

Cash was  $18,792,000  and  $20,096,000  at September  30, 1997 and December 31,
1996,  respectively.  Cash  provided by  operations  for the nine  months  ended
September  30, 1997 was  compared to cash  provided by  operations  for the nine
months ended September 30, 1996 in the amount of .

Cash used in investing  activities for the nine months ended  September 30, 1997
was  $15,707,000  compared  to cash used in  investing  activities  for the nine
months ended September 30, 1996 in the amount of $66,763,000. This was primarily
due to the  acquisitions  of  lithotripter  operations,  discussed  above,  that
resulted in the net use of cash  amounting  to  $15,335,000  for the nine months
ended September 30, 1997 and $63,884,000 for the nine months ended September 30,
1996.

Cash used in financing  activities for the nine months ended  September 30,
1997 was $23,307,000,  primarily due to  distributions  to minority  interest of
$27,728,000  offset by  $50,959,000  in new borrowings due to an increase in the
Company's  credit  facility  in the first  quarter of 1997 less  $47,696,000  in
payments  on notes  payable.  on  notes  payable.  Cash  provided  by  financing
activities for the nine months ended September 30, 1996 was  $47,232,000,  which
included  $72,000,000 in new borrowings for the acquisition  effective May 1996,
offset by $12,409,000 in distributions  to minority  interest and $12,696,000 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
availablity on its current senior credit facility.






































                                      -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:    November 3, 1997                        By: /s/ Cheryl Williams
                                                    ----------------------
                                                    Chief Financial Officer












































                                      -13-




<PAGE>