Span-America Awarded USD $1.9 Million Contract by City of Toronto’s Long Term Care Homes and Services Division

Thursday, March 31, 2016

GREENVILLE, S.C.--(BUSINESS WIRE)-- Span-America Medical Systems, Inc. (NASDAQ: SPAN) announced today that it has been awarded a supply contract by the City of Toronto to provide medical bed frames, therapeutic support surfaces and related services to the City’s Long Term Care Homes and Services Division. The initial one-year contract has an estimated value of approximately USD $1.9 million (CAD $2.5 million) and has four one-year renewal options valued at an additional USD $8.4 million (CAD $11.0 million) over the remaining four years.

Commenting on the announcement, Jim Ferguson, president and chief executive officer of Span-America, stated, “We are very excited to be selected by the City of Toronto to supply our proprietary medical bed frames and support surfaces to their Long Term Care Homes and Services Division. This division currently operates 10 long-term care facilities that include approximately 2,641 beds.

“The supply contract is for a one-year term and has four additional one-year renewal options. We expect to begin delivery of support surfaces to the City’s Long Term Care Homes and Services Division by late June or early July 2016. Our sales volume is not guaranteed under the contract, but we expect the contract will add at least approximately USD $450,000 to fiscal 2016 sales based on initial estimates.

“Our wholly-owned subsidiary, Span Medical Products Canada, Inc., received the supply contract from the City of Toronto,” continued Ferguson. “This significant award highlights the sales momentum we have achieved by combining opportunities to sell our medical bed frames and support surfaces. We believe the combined product line has increased our bidding opportunities with long-term care providers, the Veteran’s administration and other buyers seeking a single-source provider for high quality medical beds and therapeutic support surfaces. We experienced our best year of combined bed and support surface sales in fiscal 2015, and we look forward to building on that success and continuing our momentum in the future.

“We expect to provide two different therapeutic support surfaces with our newly designed Encore® premium bed frame to the City of Toronto’s Long Term Care Homes and Services Division. They include our Geo-Mattress® UltraMax, a reactive pressure redistribution support surface, and our PressureGuard® Custom Care® Convertible LAL that features microclimate management, alternating pressure and lateral rotation for pressure redistribution. When combined with the Encore® bed, we believe our systems will result in improved levels of care and comfort for the patient and better ergonomics and protection from injury for the caregiver,” concluded Ferguson.

Forward-Looking Statements

We have made forward-looking statements in this release regarding, among other things, our expectations for future sales performance. We wish to caution the reader that these statements are only predictions. These forward-looking statements may be generally identified by the use of forward-looking words and phrases such as “will,” “intends,” “may,” “believes,” “anticipates,” “should” and “expects,” and are based on the company’s current expectations or beliefs concerning future events that involve risks and uncertainties. Actual events or results may differ materially as a result of risks and uncertainties facing the company, including: (a) the possibility that sales volumes under the new contract will be lower than expected, (b) the possibility of a loss of a key customer or distributor for our products, (c) risks related to international operations and foreign currency exchange associated with our Canadian subsidiary, (d) the potential for lost sales due to competition from low-cost foreign imports, (e) changes in relationships with large customers or key suppliers, (f) the impact of competitive products and pricing, (g) government reimbursement changes in the medical market, (h) FDA and Health Canada regulation of medical device manufacturing and (i) other risks referenced from time to time in our Securities and Exchange Commission filings. We disclaim any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. We are not responsible for changes made to this document by wire services or Internet services.

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®, Custom Care®, Span+Aids®, Isch-Dish®, Risk Manager® and Selan® products. We also supply custom foam and packaging products to the consumer and industrial markets. Through our wholly-owned subsidiary Span Medical Products Canada Inc., we manufacture and market the M.C. Healthcare Products brands of Encore®, Advantage and Rexx beds as well as related in-room furnishing products for the long-term care market. Span-America’s stock is traded on The NASDAQ Global Market under the symbol “SPAN.” For more information, visit www.spanamerica.com and www.mchealthcare.com.

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