Labwire Inc (LBWR)

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Houston Business Journal - March 5, 2004....

From the March 5, 2004 print edition

Employee screening firm faces familiar competition
Jennifer Dawson

Houston Business Journal

Dexter Morris has formed a new company -- Workplace Screening Services -- to compete with a firm he originally established 17 years ago in Houston.

Morris walked away from that original company late last year following what he calls philosophical differences with the investors he brought into the firm three years ago. Executives with the company would not discuss the matter.


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Morris was the majority owner of Drug Intervention Services of America Inc. until 2001 when he secured $15 million in venture capital funding from the Texas Growth Fund in Austin and Soros Private Equity Partners in New York. After that deal, he was reduced to a minority owner in the company, which changed its name to Drugtest Inc.

Morris served as chairman of Houston-based Drugtest until February 2002, when he stepped down. Skip Richardson stepped down as Drugtest's president at the same time, Morris says.

Morris continued to consult with the firm and serve on its board of directors until November 2003, when he left the company.

By that time, the company had changed its name to DISA Inc., which had as many as 105 employees at its peak.

Gene Perry, DISA's president and chief operating officer, would not comment on Morris or his new company. Perry was hired in May 2002 as part of a reorganization at DISA, which he says now has 50 employees.

DISA and Workplace Screening are now positioned to go head-to-head in the employee screening industry, which includes drug testing and pre-employment screening, such as background checks.

Screen team
Workplace Screening was formed last November by a private investor and Morris, who owns a controlling interest in the company.

In December, Workplace Screening acquired a software platform and the customer base of Workplace Health in Portland, Ore. Morris immediately moved the company's operations to Houston, but did not retain its six employees.

Terms of the acquisition were not disclosed.

As part of that transaction, Workplace Screening now handles pre-employment services for Banfield, The Pet Hospital. That Portland-based company provides veterinary services inside 366 PetsMart locations across the country.

Morris serves as chairman, president and CEO of Workplace Screening, which now has nine employees, some of whom previously worked at DISA. As a third-party administrator, Workplace Screening has a network of 8,000 collection sites across the country where its clients' employees are tested for drug use, he says.

The company tests employees before they are hired, randomly tests during employment, retains records of all those tests for the client, and creates reports based on that data.

"They've outsourced that whole function to us," Morris says. "We're their drug testers."

Workplace Screening targets customers that require a minimum of 800 drug tests per year, two of which are expected to sign on with the company within the next 30 days. One is in the oil and gas business and needs 1,500 to 1,800 tests per year, while the other is a national transportation company that needs 6,000 to 7,000 tests per year, Morris says.

Last month, just one month after acquiring the Workplace Health assets, Morris bought a minority ownership stake in Houston-based American K-9 Bomb Search Inc. That firm has nine employees, five dogs trained to sniff for explosives and two dogs trained to sniff for drugs.

American K-9 has contracts to check vehicles that enter petrochemical plants in the Houston area, as well as inspect the parking lots at those facilities. Morris say these types of trained dogs will be in higher demand because of heightened requirements from the Department of Homeland Security.

While the services provided by Morris' two companies are different, the way their data is compiled and reported is the same, he says.

"It fits with our service offering," he says. "Our tag line is 'single source compliance management.' This is another area you have to have compliance in."

"The greater awareness about security across-the-board has definitely been a positive for our industry," says Renee Svec, director of corporate communications at First Advantage Corp. The St. Petersburg, Fla.-based firm is an industry leader in both background checks and drug testing.

First Advantage is one of the large national players in employment screening whose growth strategy is to purchase smaller companies throughout the country.

Morris says Workplace Screening will not follow that business blueprint. He expects the company will generate $10 million in annual revenue within two years, but he wants it to stay small enough to give personal service to clients.

"That's what we think is missing in the industry right now," Morris says. "Our clients trust us. They stay with us a long time."