SPAN-AMERICA REPORTS SECOND QUARTER RESULTS
                   Declares Quarterly Dividend

 
GREENVILLE, S.C. (April 26, 2006) Span-America Medical Systems, Inc. (NASDAQ:SPAN) today reported net sales of $12.2 million and net income of $638,000, or $0.23 per diluted share, for the second quarter ended April 1, 2006. 

The Company also announced that the Board of Directors declared a regular quarterly dividend of $0.045 per share payable on June 5, 2006 to shareholders of record on May 15, 2006.

"Net income rose 6% in the second quarter and benefited from the combination of higher medical sales, lower expenses and growth in non-operating income," stated Jim Ferguson, president and CEO of SpanAmerica Medical Systems. "Medical sales grew 10% to $8.5 million and were up in all major medical product lines compared with the second quarter of last year. Total sales declined 6% for the quarter due to lower custom product sales that fell 30% to $3.7 million compared with the same quarter of last year. We continued to experience pressure on consumer bedding sales during the second quarter due to competition from visco foam products and a change in buying patterns from two major customers."

Medical Segment
Medical sales rose to $8.5 million in the second quarter of fiscal 2006 and accounted for 70% of total sales, up from 59% of sales in the second quarter of the prior year. The majority of the medical sales growth was attributable to the Company's proprietary mattress product lines. Sales of mattress products rose 6% compared with the second quarter of last year. The growth rate in second quarter mattress sales slowed somewhat due to the comparison with a large order from a long-term care customer in the yearago period that was not repeated in the second quarter this year.

The Company's private label PressureGuard® products and PressureGuard Easy Air® low-air-loss mattress were sales leaders in the most recent quarter. In addition, sales accelerated on the two newest mattress products, the PressureGuard Safety Supreme™ and Air Lift™.

"We are encouraged with the success of our new mattress products," continued Mr. Ferguson. "Our broad line of therapeutic support surfaces continues to be the heart of our medical business, and we plan to continue our focus on developing new products for the medical segment."

In other medical product lines, sales of seating products increased by 15%, overlays grew by 12%, SpanAids® patient positioners were up by 10% and the Selan® line of skin care products rose 6%. 

Custom Products Segment
Sales in the custom products segment fell by 30% to $3.7 million compared with $5.3 million in the second quarter of last year. The decline was caused by lower volumes of consumer bedding products which were down by 39% to $2.7 million due to continuing competition from imported and domestic visco foam products, an inventory adjustment at Wal-Mart that slowed consumer sales in February and March, and the acquisition of May Company by Federated Stores which resulted in the loss of parts of our May Company business. The decline was offset somewhat by higher sales of industrial products during the quarter. Industrial sales rose 25% to $989,000 compared with the second quarter of last year on increased demand from existing customers.

Safety Catheter Segment
Sales of the Secure I.V. safety catheter were $28,000 in the second quarter. There were no comparable sales of Secure I.V. in the prior year's second quarter. "We began limited marketing of Secure I.V. two quarters ago and have had significant interest in our product's unique features. We have a number of ongoing evaluations and are continuing to expand our sales and distribution efforts. Our challenge for Secure I.V. will be to convert the initial market interest into sales in future quarters," noted Mr. Ferguson.

Earnings
Gross profit for the second quarter declined by 7% to $3.6 million compared with $3.8 million last year primarily due to lower sales volume and higher raw material costs for foam, our primary raw material. Gross profit margin declined slightly during the quarter to 29.2% from 29.7% in the same quarter last year.

"The increase in medical product sales was the major factor in our gross margin being relatively stable compared with last year," noted Mr. Ferguson. "The improved product mix mostly offset the lower sales volume from custom products and higher raw material costs compared with last year. In addition, higher material costs were also partly offset by reductions in direct labor and manufacturing overhead expenses."

Operating income rose 2% for the quarter to $774,000 from $762,000 in the year-ago quarter. The increase in operating profit was the result of lower R&D and administrative expenses during the quarter. Total R&D expenses were down 52% to $155,000 compared with $324,000 in the second quarter last year. The majority of the decrease was due to lower costs associated with the safety catheter segment as the initial development phase was completed, offset somewhat by higher R&D expenses for the medical segment. Medical R&D expenses rose 31% compared with the second quarter of last year due to continued development of new therapeutic support surfaces.

Total operating costs in the safety catheter segment were down by 41% during the quarter to $280,000 compared with $477,000 due primarily to the reduction in R&D expenses described above. The net loss in the segment also declined by 41% to $182,000, or $0.07 per diluted share, from $310,000, or $0.11 per diluted share, in the second quarter last year

Non-operating income increased 30% to $207,600 in the second quarter compared with $159,300 in the same quarter last year due mainly to a $35,000 gain on the sale of manufacturing equipment. Investment income for the quarter was up 114% to $43,400 due to higher interest rates on the Company's short-term investments. Royalty income for the second quarter declined by 7% to $128,300 due to lower sales of the syringe product licensed to Becton Dickinson and Company (BD). The license agreement with BD expired in December 2005 due to the expiration of the related patents, and the final royalty payment was received in the second quarter. No further royalty payments will be received from the BD license agreement.

Net income for the second quarter increased 6% to $638,000, or $0.23 per diluted share, from $600,000, or $0.22 per diluted share in the year-ago quarter. The earnings increase was the result of higher medical sales, lower expenses in the safety catheter segment and an increase in non-operating income.

Year-to-Date
For the first half of fiscal 2006, net sales increased 8% to $25.5 million compared with $23.7 million in the first half last year. The sales growth was primarily attributable to the 24% increase in medical segment sales to $17.6 million. Most of the medical sales growth was the result of a 33% year-to-date increase in mattress sales. In the custom products segment, first half sales were down 18% to $7.8 million due to increased competition from imported and domestic visco foam products and changes in marketing programs at several retail customers. Sales in the safety catheter segment were $42,000 for the first two quarters of fiscal 2006.

Net income for the year to date in fiscal 2006 increased 30% to $1.4 million, or $0.52 per diluted share, compared with $1.1 million, or $0.40 per diluted share, for the year-earlier period. The increase in first half earnings was mainly the result of higher sales in the medical segment and lower expenses in the safety catheter segment.

Outlook for Fiscal 2006
"We believe business conditions for the remainder of fiscal 2006 will be positive," stated Mr. Ferguson. "We are encouraged about our performance in the first half of the year, particularly our second quarter earnings growth compared with unusually strong earnings from last year's second quarter.

"We anticipate continued growth in our medical business with the majority of sales growth coming from our PressureGuard and Geo-Mattress® product lines. We expect the growth rate in this segment to be somewhat lower than in the first half of fiscal 2006.

"We expect custom products sales for the third quarter to be at similar levels to the second quarter. We are working on a new program with one of our larger customers that is scheduled to launch in September. We are optimistic that this will have a positive effect on custom products sales in fiscal year 2007.

"In the safety catheter segment, we expect sales to continue to grow slowly as we expand marketing and distribution efforts for Secure I.V. We believe expenses in the safety catheter segment during the next two quarters will be similar to first-half levels of this year.

"Near the end of the second quarter, we signed a one-year distribution agreement with Command Medical Products that adds a new product line to the safety catheter segment. In third quarter, we will begin selling the HuberPro™ safety huber needle infusion set to customers in the alternate site market – primarily in oncology clinics. The HuberPro will be carried by our existing Secure I.V. distributors and will complement the Secure I.V. product line. Our investment in the new product line is limited to the purchase of inventory, which we will stock and then resell through our distributors. We believe the addition of the HuberPro will quickly add to sales and earnings in the safety catheter segment," concluded Mr. Ferguson.

About Span-America Medical Systems, Inc.
Span-America manufactures and markets a comprehensive selection of pressure management products for the medical market, including Geo-Matt®, PressureGuard®, Geo-Mattress®, Span+Aids®, Isch-Dish®, and Selan® products. The Company also supplies custom foam and packaging products to the consumer and industrial markets. Span-America's stock is traded on The NASDAQ Stock Market's National Market under the symbol SPAN.

Forward-Looking Statements
The Company has made forward-looking statements in this release, regarding management's expectations for future sales and earnings performance. Management wishes to caution the reader that these statements are only predictions. Actual events or results may differ materially as a result of risks and uncertainties facing the Company, including: (a) volatile pricing conditions in the market for polyurethane foam, (b) the potential for lost revenues and earnings as a result of the Company's actions to increase its sales prices in response to unusually high raw material cost increases, (c) the loss of a key distributor of the Company's medical or custom products, (d) the inability to achieve anticipated sales volumes of medical or custom products, (e) non-foam raw material cost increases, (f) the degree of success achieved in manufacturing and selling the Secure I.V. safety catheter product line, (g) potential problems arising from having a sole source contract manufacturer for the Secure I.V. product line, (h) the potential for lost sales due to competition from low-cost foreign imports, (i) changes in relationships with large customers, (j) the impact of competitive products and pricing, (k) government reimbursement changes in the medical market, (l) FDA regulation of medical device manufacturing and other risks referenced in the Company's Securities and Exchange Commission filings. The Company disclaims any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Span-America Medical Systems, Inc. is not responsible for changes made to this document by wire services or Internet services.

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