Company: AMWL
Filing Date: 2025-02-12
Form Type: 10-K
Source: 0000950170-25-019024
Chunk: 157

Company: American Well Corp
Filing Date: 2025-02-12
Form: 10-K
Item: Item 1B
Chunk 157
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 Consulting spend also decreased by $2.1 million. The Company's cost savings measures continue to have a positive impact on gross margin.

For the year ended December 31, 2023, the increase in cost of revenue was primarily due to an increase of $4.5 million in employee-related costs such as salary and benefits for the fulfilment of professional service obligations. Third party software costs also increased $3.0 million. These increases were partially offset by a decrease in hardware costs of $2.4 million due to the decline in hardware revenue and a decline in provider related costs of $1.3 million due to a decrease in visits. The decrease in gross margin contribution is a result of a shift in revenue mix.

Research and Development Expenses 

For the year ended December 31, 2024, the decrease in research and development expense was primarily driven by a decrease of $12 million in consulting spend as the peak development of the Amwell Converge™ platform is complete. There was also a decrease in employee-related costs (including stock comp expense) of $7.6 million due to headcount reduction.

For the year ended December 31, 2023, the decrease in research and development expense was primarily driven by a decrease of $24.8 million in consulting services as spend related to the development of the Amwell Converge™ platform has declined (contributing to this decrease was $15.1 million capitalized as software development costs) as well as a decrease of $1.2 million in third party software costs. There was a decrease in $0.7 million in employee related costs and $0.6 million in recruiting and hew hire costs due to a reduction in headcount. Research and development expense also decreased as there was no non-cash compensation in the current year related to the SilverCloud acquisition, and there was a charge of $3.4 million in the prior year due to the settlement of the SilverCloud bonus escrow award in 2022.

Total research and development employee headcount decreased to 289 on December 31, 2024, as compared to 332 on December 31, 2023 and 358 on December 31, 2022. 

Sales and Marketing Expenses

For the year ended December 31, 2024, the decrease in sales and marketing expense was driven by a decrease in employee-related costs of $8.6 million, a decrease in other consulting spend of $1.9 million, a decrease in business related travel of $