We had total operating expenses of $9,593,000 for the year ended December 31, 2016, a decrease of $5,827,000, or 37.8%, compared to $15,420,000 in 2015. The primary reason for the decrease in operating expenses in 2016 as compared to 2015 is attributable to a decrease in stock-based compensation expense, which was higher than normal in 2015 due to the acceleration of vesting of stock option awards in December 2015 that did not occur in 2016. We also saw a decrease in WellChec™-related expenses as we shifted our focus away from the provision of WellChec™ services as a primary vendor. The remaining decrease was a result of the changes in the various components of our operating expenses, which are described in more detail below.
Cost of revenue
We had cost of revenue of $1,873,000 for the year ended December 31, 2016, a decrease of $974,000, or 34.2%, from $2,847,000 for 2015. The primary reasons for the decrease in cost of revenue in 2016 compared to 2015 were lower operational costs associated with WellChec™ and the absence of start-up costs associated with launch of WellChec™ in 2015, partially offset by increased costs associated with the growth in the vascular products for lease business. Other causes for the $974,000 decrease are lower headcount related expenses of $920,000, lower WellChec™ event expenses of $256,000 and lower freight and shipping of $105,000, all partially offset by higher cost of retired units of $79,000, higher additional depreciation of capital equipment to support WellChec™ of $70,000, higher other expenses of $67,000, higher aggregate depreciation of our vascular testing products for lease of $52,000, higher building lease of $26,000 and higher depreciation of other fixed assets of $13,000.
Higher aggregate depreciation of vascular units was attributable to a 23.4% increase in the number of installed units in the field incurring monthly depreciation charges corresponding to the 23.4% increase in number of installed units in the field generating monthly revenue, partially offset by a decrease in average depreciation per unit per month of 3.5%.
Engineering and product development expense
We had engineering and product development expense of $866,000 for the year ended December 31, 2016, a decrease of $570,000, or 39.7%, compared to $1,436,000 in 2015. The decrease was primarily due to lower salaries of $259,000, lower clinical studies cost of $134,000, lower costs for new product development of $94,000, lower stock-based compensation expense of $54,000, lower other expenses of $16,000, and lower travel costs of $13,000.
Sales and marketing expense
We had sales and marketing expense of $3,827,000 for the year ended December 31, 2016, a decrease of $2,439,000, or 38.9%, compared to $6,266,000 in 2015. The decrease was primarily due to lower stock-based compensation expense of $1,078,000, lower travel expenses of $423,000, lower salary expense of $412,000, lower sales commissions of $218,000, lower rent of $165,000, lower trade show expense of $132,000, and lower other expenses of $11,000.
General and administrative expense
We had general and administrative expense of $3,027,000 for the year ended December 31, 2016, a decrease of $1,844,000, or 37.9%, compared to $4,871,000 in 2015. The decrease was primarily due to lower stock-based compensation expense of $1,173,000, lower salaries and fees for employees, directors and consultants of $273,000, lower medical device excise tax, state and local tax and audit and tax preparation expenses of $230,000, a decrease in uncollectible accounts of $163,000, lower patent and legal expenses of $109,000, lower insurance costs of $47,000, and lower travel costs of $27,000, partially offset by higher costs associated with being publicly traded company of $89,000, higher merchant fees and other expenses of $53,000, and higher technical support costs of $36,000.
We had interest expense of $391,000 for 2016, an increase of $305,000, or 354.6%, compared to $86,000 in 2015. The increase was primarily due to an increase in our outstanding indebtedness, as we had