Summary of Castle Biosciences (CSTL) FY Conference Call - August 12, 2025 Company Overview - Castle Biosciences specializes in dermatologic and gastrointestinal (GI) cancer tests, including DecisionDx Melanoma and TissueCypher for GI cancer [1][2] Key Financial Performance - In Q2, Castle Biosciences reported a **33% year-over-year growth in volume** and **23% revenue growth**, totaling **$276 million** in cash at the end of the quarter and generating **$21 million** in operating cash flow [4][49] Core Products and Market Penetration - **TissueCypher**: Achieved nearly **100% year-over-year growth in volume**. Current market penetration is about **10%** for patients and higher for physicians, indicating significant growth potential [6][10] - **DecisionDx Melanoma**: Expected to grow at **high single digits** year-over-year, with a strong performance in Q2 showing **4% growth** year-over-year [32][34] Strategic Initiatives - Expansion of the sales force for the GI business, with plans to increase staffing to better serve approximately **10,000 gastroenterologists** [11] - Acquisition of **Previse**, which offers the complementary **ESA Predict** test, aimed at enhancing the GI cancer testing portfolio [13][15] Pipeline Developments - Development of a new test for **atopic dermatitis**, targeting a market of approximately **24 million** diagnosed patients in the U.S., with **7.4 million** in the moderate to severe category [21][22] - The test aims to predict responses to systemic therapies, with a focus on achieving a **90% clearance** in lesions [27][29] Regulatory and Reimbursement Landscape - **DecisionDx Melanoma** received a breakthrough device designation from the FDA, which could lead to improved reimbursement and market access [35][38] - Ongoing efforts to secure Medicare coverage for **SooDx SCC**, with a valid reconsideration request submitted to both Novitas and MolDX [40][44] Investor Insights - Castle Biosciences has demonstrated a **CAGR of 52%** since going public in July 2019, positioning itself as a strong performer in the diagnostic space [49][50] - The company is well-positioned for near-term and mid-term growth, with multiple product lines showing promise and a healthy cash flow [50] Conclusion - Castle Biosciences is focusing on expanding its market presence in both dermatologic and GI cancer testing, with strong financial performance and strategic acquisitions supporting its growth trajectory. The company is also navigating regulatory challenges while preparing for new product launches in the near future [52]

Financial Data and Key Metrics Changes - The company reported revenue of $86.2 million for Q2 2025, a decrease of $800,000 or 1% compared to Q2 2024, primarily due to a $12.5 million decrease in revenue from dermatological tests, offset by an $11.7 million increase from non-dermatological tests [18][19] - Adjusted revenue for Q2 2025 was $86.2 million, also a decrease of 1% compared to the previous year [19] - The gross margin for Q2 2025 was 77.3%, down from 80.7% in Q2 2024, while adjusted gross margin was 79.5%, compared to 83.2% in the same period last year [20][22] - Net income for Q2 2025 was $4.5 million, compared to $8.9 million in Q2 2024, with diluted earnings per share of $0.15 versus $0.31 in the prior year [22] Business Line Data and Key Metrics Changes - For DecisionDx Melanoma, the company delivered 9,981 test reports in Q2 2025, a sequential increase of approximately 16% compared to Q1 2025 and a year-over-year increase of about 4% compared to Q2 2024 [8][9] - DecisionDx SCC test reports totaled 4,762 in Q2 2025, with reimbursement challenges noted due to a local coverage determination policy that went into effect on April 24, 2025 [11][12] - Tissue Cypher test reports reached 9,170 in Q2 2025, representing a 92% year-over-year growth compared to Q2 2024 [13] Market Data and Key Metrics Changes - The company expects continued solid growth in the second half of 2025, reiterating expectations for high single-digit volume growth for DecisionDx Melanoma for the full year [9] - The collaboration with the National Cancer Institute's SEER program is ongoing, enhancing the clinical evidence for DecisionDx Melanoma [10] Company Strategy and Development Direction - The company is focused on investing in near-term growth initiatives, including expanding clinical evidence and optimizing the commercial team [7] - The strategy includes pursuing M&A opportunities that complement the existing portfolio and drive mid- to long-term value creation [24] - The company is also developing a diagnostic test for atopic dermatitis in collaboration with Sybase, targeting a significant unmet clinical need [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical value of their tests and the strength of their balance sheet, which positions the company well for future investments [7][8] - The management acknowledged the challenges posed by the reimbursement environment but remains optimistic about the growth potential of their tests [24] Other Important Information - The company raised its total revenue guidance for 2025 to $310 million to $320 million, up from a previous range of $287 million to $297 million [19] - The company has a strong cash position, ending Q2 2025 with $275.9 million in cash, cash equivalents, and marketable securities [23] Q&A Session Summary Question: Plans for FDA approval after breakthrough designation for DecisionDx Melanoma - Management confirmed they are moving forward with plans for FDA submission but did not disclose specific timing [28][29] Question: Payment status for DecisionDx SCC volume - Management indicated they receive episodic payments on commercial claims but noted it is not a significant percentage [30][31] Question: Insights on GI sales rep productivity - Management stated that the sales team is expected to reach full productivity in the third and fourth quarters of the year [34] Question: Reimbursement outlook for atopic dermatitis products - Management is pursuing multiple reimbursement avenues and expects to launch the test by the end of 2025, with significant revenue impact anticipated in 2027 and beyond [40][41] Question: Continuation of DecisionDx SCC offering - Management confirmed they will continue to offer the SCC test while awaiting reconsideration outcomes, emphasizing patient care [44] Question: Drivers for revenue guidance increase - Management noted strong drivers across the business and historical seasonal trends affecting revenue [46] Question: Tissue Cypher growth expectations - Management expects continued growth in Tissue Cypher volumes, with no specific guidance for 2026 yet [52][54]

Financial Data and Key Metrics Changes - The company reported revenue of $86.2 million for Q2 2025, a decrease of $800,000 or 1% compared to Q2 2024, primarily due to a $12.5 million decrease in revenue from dermatological tests, offset by an $11.7 million increase from non-dermatological tests [17][18] - Adjusted revenue for Q2 2025 was $86.2 million, also a decrease of 1% compared to the previous year [18] - The gross margin for Q2 2025 was 77.3%, down from 80.7% in Q2 2024, while adjusted gross margin was 79.5% compared to 83.2% in the same period last year [19] - Net income for Q2 2025 was $4.5 million, compared to $8.9 million in Q2 2024, with diluted earnings per share at $0.15 versus $0.31 in the prior year [22] Business Line Data and Key Metrics Changes - For DecisionDx Melanoma, the company delivered 9,981 test reports in Q2 2025, a sequential increase of approximately 16% compared to Q1 2025 and a year-over-year increase of about 4% compared to Q2 2024 [7][8] - DecisionDx SCC test reports totaled 4,762 in Q2 2025, with revenue from this test estimated at just above $15 million [10][17] - Tissue Cypher test reports reached 9,170 in Q2 2025, representing a 92% year-over-year growth compared to Q2 2024 [12] Market Data and Key Metrics Changes - The company expects continued solid growth in the second half of 2025, reiterating expectations for high single-digit volume growth for DecisionDx Melanoma for the full year [8] - The collaboration with the National Cancer Institute's SEER program is ongoing, enhancing the clinical management of melanoma patients [9] Company Strategy and Development Direction - The company is focused on investing in near-term growth initiatives, including expanding clinical evidence and optimizing the commercial team [6] - The M&A strategy aims to complement the existing portfolio to drive mid- to long-term value creation, with a focus on tests that have established reimbursement and high clinical value [24] - The company is pursuing a multi-omics approach for improved test value in Barrett's esophagus and other GI diseases [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the clinical value of their tests and the ability to create value for shareholders in the near and long term [26] - The company is optimistic about the potential for their atopic dermatitis test and expects to launch it by the end of 2025 [14][44] - Management acknowledged challenges in the reimbursement environment but remains committed to providing innovative tests that significantly impact patient care [47] Other Important Information - The company ended Q2 2025 with $275.9 million in cash, cash equivalents, and marketable securities, positioning it well for future investments [6][23] - The company has submitted reconsideration requests for DecisionDx SCC to Novitas and MolDx, with expectations of a response from MolDx by Labor Day [58][59] Q&A Session Summary Question: Plans for FDA approval after breakthrough designation for DecisionDx Melanoma - Management is moving forward with efforts to seek FDA submission but did not disclose specific timing [30] Question: Payment status for DecisionDx SCC volume - The company receives episodic payments on commercial claims, but these are not significant percentages [31][33] Question: Insights on GI sales rep productivity - The sales team is expected to reach full productivity in the third and fourth quarters of 2025 [36] Question: Reimbursement outlook for atopic dermatitis test - The company is pursuing multiple reimbursement avenues and expects limited revenue impact in 2026 [44] Question: Continuation of DecisionDx SCC offering - The company plans to keep the test available in the marketplace while moderating volume due to educational sales efforts [46] Question: Drivers for revenue guidance increase - The company raised its revenue guidance due to strong business drivers and historical seasonal trends [48] Question: Growth expectations for Tissue Cypher - The company anticipates continued growth in Tissue Cypher volumes without significant seasonality expected [56] Question: Progress with private payers for DecisionDx Melanoma - The company continues to generate data to support payer engagement, despite resistance from the payer community [102]