SPAN-AMERICA REPORTS RESULTS
FOR THIRD QUARTER OF FISCAL 1997

 Authorizes 200,000 Share Stock Repurchase Program

J. Ernest Lathem, M.D. Named Vice-Chairman of the Board
 Declares Quarterly Dividend

Greenville, South Carolina (July 23, 1997) Span-America Medical Systems, Inc. (Nasdaq/NM:SPAN) today reported its results for the third quarter and nine months ended June 28, 1997. It was also announced that the Company's Board of Directors authorized a 200,000 share stock repurchase program and named J. Ernest Lathem, M.D. as Vice-Chairman of the Board. In addition, the Company announced a regular cash dividend of $0.025 per share payable on September 2, 1997, to shareholders of record as of August 15, 1997.

 Third Quarter Net Income Rises 159% to $399,000

Net income for the quarter rose 159% to $399,000, or $0.13 per share, compared with $154,000, or $0.05 per share, in the third quarter of fiscal 1996. Net sales for the third quarter of fiscal 1997 were down 1% to $8.7 million compared with the third quarter last year.

"Span-America's net income improved substantially since the third quarter of fiscal 1996 due to improved margins and lower selling and administrative expenses," stated Jim Ferguson, president and chief executive officer of Span-America Medical Systems, Inc. "We have made significant progress in reducing costs throughout our business to improve the efficiency of our operations. We plan to focus on building our sales base, particularly in our core medical business, and are excited about the growth opportunities in the long-term care and home-care markets for our medical products."

 Sales of medical products increased 6% in the third quarter of fiscal 1997 due to higher volumes of mattress overlays and positioners compared with the third quarter of the prior year. Industrial sales rose 1% compared with the third quarter of last year. Contract packaging sales were down 7% and consumer sales declined 5% from the prior third quarter and were the primary factors contributing to Span-America's quarterly sales decline of 1% compared with the third quarter of fiscal 1996.

 The Company's gross margin increased to 27.0% due to improved manufacturing efficiencies and contributed to a 2% increase in gross profit to $2.3 million compared with the third quarter of fiscal 1996. Operating income for the quarter rose 225% to $547,000 compared with $168,000 and benefitted from a 15% reduction in sales and marketing expense and a 19% decrease in administrative expenses compared with the third quarter of fiscal 1996.

Nine-Month Results

For the first nine months of fiscal 1997, sales increased 7% to $25.0 million from $23.3 million in the same period last year. Net income for the first three quarters of fiscal 1997 rose 195% to $1,147,600, or $0.36 per share, compared with earnings of $388,600, or $0.12 per share, for the first nine months of fiscal 1996.

Stock Repurchase Program Announced

The Board of Directors authorized a repurchase program of up to 200,000 shares of the Company's stock. The stock will be purchased from time to time in the open market or in privately negotiated transactions and is in addition to approximately 130,000 shares repurchased by the Company in private transactions earlier this fiscal year.

"We believe Span-America's stock represents an attractive investment at current prices," stated Mr. Ferguson. "In authorizing the stock repurchase program, the Board cited its optimism based on the current earnings performance of the Company and our future prospects. In addition, the Company is currently in a position to fund the repurchase program from existing resources without having a material effect on financing future growth, including possible acquisitions."

Lathem Named Vice-Chairman

The Board of Directors named J. Ernest Lathem, M.D. as Vice-Chairman. It is presently anticipated that Dr. Lathem will serve as Vice-Chairman until the 1998 Stockholders' Meeting at which time he will assume the position of Chairman of the Board, replacing Brien Laing. Mr. Laing will continue to serve as Chairman until the 1998 Stockholders' Meeting and as a director until the 1999 Stockholders' Meeting when he will retire from the Board, having reached the Board's normal retirement age.

Dr. Lathem has been a director of Span-America since 1996. He retired in 1993 from 28 years in the private practice of urological surgery in Greenville, South Carolina. He also serves as a director of Southern National Corporation and one of its subsidiaries, BB&T of South Carolina. Additionally, he has served as director of several closely held corporations.

Span-America Medical Systems, Inc. manufactures and markets products to the health care industry for the prevention and treatment of pressure ulcers. The Company also is a manufacturer and marketer of foam and contract packaging products for the consumer and industrial markets. Span-America's stock is traded on The Nasdaq Stock Market's National Market under the symbol SPAN.

 With the exception of historical factual information, the statements made in this press release constitute forward-looking statements, contain the words "believes," "anticipates," "expects," and words of similar import based upon current expectations and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve certain assumptions, risks and uncertainties that could cause actual results to differ materially from those included in or contemplated by the statements. The Company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the issuance of this press release.