Castle Biosciences, Inc. (NASDAQ:CSTL) Q1 2023 Earnings Conference Call May 3, 2023 4:30 PM ET Company Participants Camilla Zuckero - Vice President, Investor Relations & Corporate Affairs Derek Maetzold - Founder, President & Chief Executive Officer Frank Stokes - Chief Financial Officer Conference Call Participants Thomas Flaten - Lake Street Capital Markets Puneet Souda - SVB Catherine Schulte - Baird Mark Massaro - BTIG Sung Ji Nam - Scotiabank Operator Good afternoon, and welcome to Castle Biosciences ...

| --- | --- | --- | --- | |-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | 2 Financial Performance Summary Q1 2023 1See Non-GAAP reconciliations at the end of this presentation. 2Year-over-year change in cash, cash equivalents and marketable securities includes the acquisition of AltheaDx in April 2022 and payout of annual bonuses in Q1 2023, among other uses. Key Q1 2023 Accomplishments Published prospective, multicenter study, called DECIDE,1 showing DecisionDx-Melanoma test resul ...

December 31, 2022 AltheaDx, Inc. Unaudited Pro Forma Financial Information Property and equipment, net consisted of the following (in thousands): 8. Goodwill and Other Intangible Assets, Net Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) | --- | --- | --- | --- | --- | --- | --- | --- | |--------------------------------------------|-------|--------------------------------|-------|-------------------------------------------------------- ...

Financial Performance & Guidance - The company delivered strong year-over-year revenue growth, meeting the top end of its guided range, with total test reports delivered in 2022 up by 58% over 2021[5] - Total test reports in 2022 were 44,419, a 58% increase compared to 28,145 in 2021[5, 20] - Revenues in 2022 reached $137 million, up from $94.1 million in 2021[20] - The company anticipates approximately $170 - $180 million in revenue for 2023[20] Market & Pipeline - The estimated U S Total Addressable Market (TAM) for commercially available tests is approximately $8 billion[12] - Tests in the pipeline add an additional estimated ~$3 6 billion to the U S TAM, including $1 9 billion for inflammatory skin disease and $1 7 billion for additional dermatology tests[17] - The company expects to launch an inflammatory skin disease therapy response pipeline test by 2025[27, 113, 133] Clinical Utility & Evidence - A collaborative NCI study is expected to be published, demonstrating higher melanoma-specific survival for patients tested with DecisionDx-Melanoma[13] - Data analysis shows a 21% benefit in overall survival and a 27% benefit in melanoma-specific survival at 3 years for patients tested with DecisionDx-Melanoma compared to untested patients[48] - IDgenetix shows >2 5x improved chance of remission of depression symptoms vs control[89] Strategic Focus - The company is focused on diagnostic support, risk stratification, and therapy response areas along the patient care journey[10, 11] - Key strategic opportunities include Mental Health and Gastrointestinal areas[8, 9] - The company emphasizes continuous evolution & improvement, customer & solution centricity, and exceptional employees[7, 15]

Castle Biosciences, Inc. (NASDAQ:CSTL) Q4 2022 Earnings Conference Call February 28, 2023 4:30 PM ET Company Participants Camilla Zuckero - Vice President, Investor Relations and Corporate Affairs Derek Maetzold - Founder, President and Chief Executive Officer Frank Stokes - Chief Financial Officer Conference Call Participants Sung Ji Nam - Scotiabank Thomas Flaten - Lake Street Operator Good afternoon, and welcome to Castle Biosciences Fourth Quarter 2022 Conference Call. As a reminder, today's call is be ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File Number: 001-38984 CASTLE BIOSCIENCES, INC. (Exact name of registrant as specified in its charter) Delaware ...

| --- | --- | --- | --- | |-------|-------|-------|-------| | | | | | | | | | | | | | | | Disclaimers 2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. These forward-looking statements include, but are not limited to, statements concerning: estimated sizes of the tota ...

Financial Data and Key Metrics Changes - Castle Biosciences reported a revenue increase of 58% year-over-year for Q3 2022, reaching $37 million, with total test report volume growing by 57% [10][35] - The company raised its full-year 2022 revenue guidance to between $132 million and $137 million, reflecting anticipated growth of at least 40% from 2021 [10][35] - The gross margin for Q3 2022 was 69.8%, down from 77.9% in Q3 2021, while adjusted gross margin was 76.2%, compared to 80.9% in the same period last year [37][36] Business Line Data and Key Metrics Changes - In the dermatology segment, the company delivered 9,824 test reports, a 34% increase from Q3 2021, with DecisionDx-Melanoma contributing 7,354 reports, also a 34% increase [13][21] - The DecisionDx-SCC test saw a 75% increase in test volume compared to the previous year, driven by high clinical need and the value of the test [21] - The gastroenterology franchise delivered 690 TissueCypher test reports in Q3 2022, nearly doubling from the previous quarter [24] Market Data and Key Metrics Changes - The company estimates a market penetration of approximately 4% for its skin cancer tests combined [13] - The American Gastroenterological Association's clinical practice update supports the use of TissueCypher for risk stratification, potentially impacting around 348,000 endoscopies annually [25] Company Strategy and Development Direction - Castle Biosciences aims to achieve exceptional execution through three guideposts: exceptional employees, continuous evolution and improvement, and customer and solution-centric focus [11] - The company is focusing on expanding its commercial sales team to enhance the reach and frequency of its cancer tests, particularly in dermatology [19] Management's Comments on Operating Environment and Future Outlook - Management highlighted the potential impact of Hurricane Ian on Q4 results, particularly due to a lag in test order placements following patient biopsies [34] - The company anticipates achieving total revenue between $255 million and $330 million by the end of 2025, with expectations for positive net operating cash flow by that year [48] Other Important Information - The net loss for Q3 2022 was $20.2 million, compared to a net loss of $11.8 million in Q3 2021, with adjusted EBITDA at negative $8.3 million [46] - The company had cash and cash equivalents of $134 million and $132 million in short-term investments as of September 30, 2022 [47] Q&A Session Summary Question: Impact of Hurricane Ian on operations - Management noted that the impact of Hurricane Ian is still being assessed, with a lag of 2 to 3 weeks between patient biopsies and test orders, indicating that the full impact is not yet clear [51][52] Question: Update on ADLT status for SEC test - Management believes the SEC test should qualify for ADLT status and is evaluating their approach to this application [54] Question: Details on the dedicated sales team for MyPath Melanoma and DiffDx Melanoma - The new sales team began training in mid-September, and while no impact was seen in Q3, modest improvements are expected in Q4 as they become more active in the field [56] Question: Early adoption of TissueCypher - Management indicated that TissueCypher is starting from a low base of awareness, but they are seeing growth in orders, particularly among non-dysplastic Barrett's esophagus patients [58][60] Question: Scenarios regarding SEC coverage and potential revenue impact - Management discussed the potential timeline for revenue impact if coverage is lost, estimating a gap in coverage could occur between April and July 2023, depending on the final determination of the LCD [66][67] Question: 2023 growth outlook - Management expressed optimism for 2023 growth, citing strong sales personnel and clinical data supporting the utility of their tests [70]

| --- | --- | --- | --- | |-------|-------|-------|-------| | | | | | | | | | | | | | | | Disclaimers 2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. These forward-looking statements include, but are not limited to, statements concerning: estimated sizes of the tota ...

Revenue Generation and Market Potential - Castle Biosciences' primary revenue is generated from the DecisionDx®-Melanoma test, which has a total addressable market (TAM) of approximately $540 million in the U.S.[90] - The company launched the DecisionDx®-SCC test in August 2020, targeting high-risk cutaneous squamous cell carcinoma patients, with an estimated U.S. TAM of approximately $820 million[92] - Castle Biosciences estimates that approximately 415,000 patients annually undergo endoscopic biopsy for Barrett's Esophagus, representing a TAM of approximately $1 billion[92] - The acquisition of AltheaDx in April 2022 is expected to expand the U.S. TAM by approximately $5 billion, focusing on pharmacogenomic testing for mental health conditions[92] - The company initiated a clinical study for a genomic test aimed at predicting response to systemic therapy in inflammatory skin conditions, with a potential TAM of approximately $1.9 billion[92] Test Report Growth and Utilization - The number of test reports delivered for dermatologic tests increased by 33.6% in Q3 2022 compared to Q3 2021, driven by growth in DecisionDx-Melanoma and DecisionDx-SCC tests[94] - For the nine months ended September 30, 2022, the total number of test reports generated was 31,775, compared to 19,876 in the same period of 2021, reflecting significant growth[94] - Approximately 75% of clinicians ordering the DecisionDx-SCC test also ordered the DecisionDx-Melanoma test during the nine months ended September 30, 2022, indicating strong cross-utilization[97] - The number of test reports delivered is a key metric for evaluating growth in adoption among healthcare providers[106] Reimbursement and Coverage - The company has received Medicare coverage for both DecisionDx-Melanoma and DecisionDx-UM, covering approximately 50% of the addressable patient populations for these tests[90] - The company has received local coverage determinations for its tests, covering approximately 60 million lives under Medicare and Medicare Advantage[98] - The reimbursement rate for the DecisionDx-UM test is set at $7,776 for 2022, based on the median private payor rate[98] - The reimbursement rate for the DecisionDx-Melanoma test is $7,193 for 2022, also based on the median private payor rate[98] - The TissueCypher test has a payment rate of $2,513 published in the CMS Clinical Laboratory Fee Schedule for 2022[100] - The IDgenetix multi-gene panel is reimbursed by Medicare at approximately $1,500[100] - The company expects to finalize the LCD for DiffDx-Melanoma by the end of Q2 2023[100] Financial Performance and Expenses - Net revenues for the three months ended September 30, 2022, increased by $13.5 million, or 57.7%, to $37.0 million compared to the same period in 2021, primarily due to a $12.3 million increase in revenue from dermatologic tests[123] - The increase in dermatologic revenue was driven by a 33.6% increase in total test report volumes, attributed to the expansion of the dermatologic sales force and increased patient flow from easing COVID-19 restrictions[127] - Cost of sales for the three months ended September 30, 2022, was $8.9 million, a 96.9% increase from $4.5 million in the same period in 2021[123] - Research and development expenses for the three months ended September 30, 2022, were $10.9 million, up 45.4% from $7.5 million in the same period in 2021[123] - Selling, general and administrative expenses increased by 62.1% to $36.6 million for the three months ended September 30, 2022, compared to $22.6 million in the same period in 2021[123] - Gross margin for the three months ended September 30, 2022, was $25.8 million, with a gross margin percentage of 69.8%, down from 77.9% in the same period in 2021[125] - The company reported a net loss of $20.2 million for the three months ended September 30, 2022, compared to a net loss of $11.8 million in the same period in 2021, reflecting an increase of 71.7%[123] - Net revenues for the nine months ended September 30, 2022, increased by $29.7 million, or 42.9%, to $98.7 million, primarily due to a $27.3 million increase in revenue from dermatologic tests[142] - The increase in dermatologic revenue was primarily attributable to a 46.4% increase in test volumes, reflecting higher test reports delivered across offerings[142] Cash Flow and Financial Position - As of September 30, 2022, the company had cash and cash equivalents of $134.2 million and marketable investment securities of $131.8 million, compared to $329.6 million and no marketable securities as of December 31, 2021, respectively[155]. - Cash and cash equivalents at the end of the period on September 30, 2022, were $134.2 million, down from $329.6 million at the beginning of the period[160] - Net cash used in operating activities for the nine months ended September 30, 2022, was $35.7 million, primarily due to a net loss of $46.5 million and increases in accounts receivable of $5.7 million[161] - Net cash used in investing activities for the nine months ended September 30, 2022, was $162.1 million, mainly from purchases of marketable investment securities of $131.8 million and the cash portion of the AltheaDx purchase consideration of $27.0 million[162] - Net cash provided by financing activities for the nine months ended September 30, 2022, was $2.3 million, consisting of $1.8 million from contributions to the employee stock purchase plan and $0.7 million from the exercise of stock options[163] Cost Management and Economic Impact - The company expects cost of sales to increase in absolute dollars as the number of tests performed increases and with the expansion of laboratory capacity[112] - The company has seen fluctuations in net income due to the timing of development activities and revenue recognition[100] - The impact of macroeconomic conditions, including inflation and labor shortages, is being actively monitored by the company[104] - Inflationary pressures are impacting personnel costs, and the company anticipates further impacts on other cost areas within the next twelve months[166] Employee and Operational Changes - Stock-based compensation expense totaled $9.2 million for the three months ended September 30, 2022, compared to $5.2 million for the same period in 2021, with expectations for further increases in future periods[137] - Stock-based compensation expense totaled $26.4 million for the nine months ended September 30, 2022, compared to $14.9 million in the same period in 2021, reflecting an increase in headcount from 311 to 517 employees[154] - The increase in net cash used in operating activities by $19.5 million for the nine months ended September 30, 2022, compared to the same period in 2021, was primarily due to higher operating expenses associated with growth in headcount[161] Acquisitions and Contingent Consideration - The change in fair value of contingent consideration related to acquisitions may result in additional payments of up to $125 million based on achieving certain commercial milestones[117] - The change in fair value of contingent consideration for the nine months ended September 30, 2022, resulted in a net gain of $18.0 million related to the acquisition of Cernostics[149] - The change in fair value of contingent consideration liability related to the acquisition of Cernostics decreased by $20.8 million during the three months ended June 30, 2022, due to changes in management's projections[168] Internal Controls and Reporting - The company has not experienced any changes in internal control over financial reporting that materially affected its financial reporting during the third quarter of 2022[172]