David Cotton and his family spent two decades building Meridian Health Plans into the biggest private provider of Medicaid benefits in Michigan and Illinois. It serves about 1.1 million members, with more than $4.3 billion of revenue forecast for 2018.
Now they’re cashing out. WellCare Health Plans Inc. announced in May 2018 that it’s buying Meridian for $2.5 billion, a deal that includes two state insurance businesses and a pharmacy benefits manager.
Cotton, 67, his wife Shery, and their three sons own the entire company, according to filings. The sale is expected to be completed by year-end and would leave the family with about $2 billion after taxes.
The sale of Meridian marks the end of a 21-year journey for David Cotton, a former chief of obstetrics and gynecology. He left to found Health Plan of Michigan with his family in 1997. It was a family business right from the start. The Cottons mortgaged their home, maxed out credit cards and saved on office cleaning costs by doing it themselves.
It remained a family business, with David as CEO and chairman and sons Jon and Michael as corporate president and chief operating officer, respectively. A third son, Sean, is president of the company’s pharmacy benefit manager, MeridianRx. They won’t remain involved with the business after the deal is completed.
The Cotton family may have more time for that perennial billionaire investment: real estate. They already own Meridian’s headquarters in downtown Detroit, along with Quicken’s Gilbert.