Castle Biosciences (CSTL) Earnings Transcript

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DATE

Feb. 26, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Derek J. Maetzold
• Chief Financial Officer — Frank Stokes

TAKEAWAYS

• Total revenue -- $87 million for the quarter and $344.2 million for the year, with guidance for the next year at $340 million to $350 million.
• Test report volume -- 105,053 reports from core drivers for the year, up 37%, with TissueCypher volumes increasing 86% to 39,014.
• DecisionDx-Melanoma volume -- 39,083 test reports with 9% growth and 1,795 first-time ordering clinicians added during the year.
• Patient penetration -- DecisionDx-Melanoma reached 31% and TissueCypher 11% penetration by year-end.
• Adjusted gross margin -- 77.6% for the quarter and 79.8% for the year, compared to 81.2% in the prior year periods.
• Net results -- Net loss of $2.3 million for the quarter and $24.2 million for the year, versus net income of $9.6 million and $18.2 million in the previous year, respectively.
• Free cash flow -- Generated $28.3 million for the year; capital expenditures were $36 million.
• Cash position -- $299.5 million in cash, cash equivalents, and marketable securities as of year-end.
• Advanced ADTX test launch -- Limited release initiated in late November, over 500 orders in the initial five weeks across more than half of 150 targeted dermatology accounts.
• M&A and pipeline initiatives -- Acquisition of ProVise, collaboration with Cybase for EIS technology, and plans for new GI disease tests and FDA device submissions in the coming year.
• Guideline recognition -- The American Gastroenterological Association highlighted TissueCypher as the first prognostic test for Barrett’s esophagus risk; DecisionDx-Melanoma’s published clinical data were only partially cited by NCCN in new guidelines.
• Sales and marketing expenses -- $138.1 million for the year, increased by personnel and activity spend, with salesforces in both dermatology and GI remaining below 100 representatives each.

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RISKS

• Gross margin decline -- Gross margin decreased to 69.2% for the year from 78.5%, impacted by "loss of revenue from DecisionDx-SCC and the one-time adjustment of an acceleration of amortization of approximately $20.1 million."
• Return to net loss -- Net loss of $24.2 million for the year after net income of $18.2 million the prior year; diluted loss per share was $0.83 compared to earnings per share of $0.62 previously.
• No revenue from DecisionDx-SCC -- No revenue included for DecisionDx-SCC in guidance and no timeline certainty for its reimbursement or commercial contribution.
• Advanced ADTX ramp -- Revenue from the advanced ADTX test expected to be immaterial in the coming year, with larger impact not expected until at least 2027 or 2028.

SUMMARY

Castle Biosciences (NASDAQ:CSTL) delivered substantial year-over-year core test volume growth, particularly in TissueCypher, while posting a net loss for the year as gross margins contracted and several headwinds emerged. The company launched its advanced ADTX test for atopic dermatitis in late November with strong initial clinician engagement but disclosed that revenues from this new product will be insignificant in the near term. Management outlined a multi-phase strategy that includes an expanded commercial footprint, the integration of the ProVise acquisition and Cybase collaboration, and plans for an FDA submission to support commercial reimbursement opportunities for DecisionDx-Melanoma. Guidance for next year anticipates steady revenue growth concentrated in core franchises, with M&A expected to remain a tool for portfolio expansion. Castle Biosciences maintains a significant cash reserve and disciplined capital allocation to support ongoing product and pipeline development activities.

• Frank Stokes emphasized, "Our revenue guide reflects continued growth in our core dermatologic and gastrointestinal franchises, driven primarily by continued TissueCypher momentum, immaterial revenue expected from our advanced ADTX test, and no revenue included for DecisionDx-SCC."
• Derek J. Maetzold said, "Our compelling body of evidence for DecisionDx-Melanoma also continues to expand, with now 58 peer-reviewed publications supporting the clinical use of the test, which is not only a key driver for test adoption."
• TissueCypher’s peer-recognized value as the first prognostic test for Barrett’s esophagus progression risk supports ongoing ordering momentum and reinforces its strategic position in the GI portfolio.
• Annual operating expenses rose by $63.6 million to $387 million, with increased headcount and commercial investments, offset only partly by reductions in stock-based compensation and lower clinical studies cost in R&D.

INDUSTRY GLOSSARY

• DecisionDx-Melanoma: A multi-gene expression test predicting metastasis risk and guiding sentinel lymph node biopsy decisions in melanoma patients.
• TissueCypher: A molecular test to assess progression risk in Barrett’s esophagus, informing interventions to prevent esophageal cancer.
• Advanced ADTX: A gene expression-based diagnostic launched for guiding systemic treatment in moderate to severe atopic dermatitis patients aged twelve and older.
• EIS (Electrical Impedance Spectroscopy): Technology under evaluation in collaboration with Cybase, used for predicting atopic dermatitis flares via a handheld device.
• LCD (Local Coverage Determination): A regional reimbursement policy from Medicare Administrative Contractors impacting test coverage and commercial availability.
• Merlin-001 Study: Referenced clinical study evaluating tests used for sentinel lymph node biopsy decision-making in melanoma.
• SEER Database: The National Cancer Institute’s Surveillance, Epidemiology, and End Results database used to compare outcomes for patients tested with DecisionDx-Melanoma.
• ASP (Average Selling Price): The average reimbursement or price received per test, referenced as a key driver for commercial expansion decisions.

Full Conference Call Transcript

Derek J. Maetzold, and Chief Financial Officer, Frank Stokes. Information recorded on this call speaks only as of today, 02/26/2026. Therefore, if you are listening to the replay or reading the transcript of this call, any time-sensitive information may no longer be accurate. A recording of today’s call will be available on the Investor Relations page of the company’s website for approximately three weeks following the conclusion of the call.

Before we begin, I would like to remind you that some of the statements made today will contain forward-looking statements, including statements about expected addressable markets, statements containing projections regarding future events, or our future financial or operational results and performance, including our anticipated 2026 total revenue and the impact of our investments and growth initiatives, including our ability to achieve long-term growth and drive stockholder value. Forward-looking statements are based upon current expectations and involve inherent risks and uncertainties, and there can be no assurances that the results contemplated in these statements will be realized. A number of factors and risks could cause actual results to differ materially from those contained in these forward-looking statements.

Please refer to the risk factors in our most recent SEC filings for more information. These forward-looking statements speak only as of today, and we assume no obligation to update or revise these forward-looking statements as circumstances change. In addition, some of the information discussed today includes non-GAAP financial measures, such as adjusted revenue, adjusted gross margin, and adjusted EBITDA, that have not been calculated in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which has been posted on the Investor Relations page of the company’s website.

I will now turn the call over to Derek.

Derek J. Maetzold: Thank you, Camilla. Good afternoon, everyone. We closed out a strong fourth quarter and delivered an outstanding year in 2025, driven by continued momentum across our core revenue drivers, disciplined execution, and the dedication of our employees. I am intentional in mentioning the dedication of our employees. It is through their efforts that we are able to deliver clinically actionable results with our current commercial tests today and tomorrow with the addition of future tests. With fourth quarter revenue of $87,000,000, we delivered revenue of $344,200,000 for the full year of 2025. Excluding DecisionDx-SCC and ID Genetics revenue from both 2025 and 2024, our revenue growth for the year would have been approximately 34%.

For the full year, we also delivered total test report volume of 105,053 test reports from our core revenue drivers, increasing 37% compared to 2024, highlighted by continued momentum in TissueCypher report volume, which achieved 86% growth over 2024. As I reflect on our many accomplishments across our growth initiatives, we have succeeded in evolving Castle considerably. Over the course of 2025, we completed the acquisition of ProVise, entered into a collaboration and license agreement with Cybase, launched our first-in-class advanced ADTX test, further strengthened our commercial teams, and continued to solidify an already strong balance sheet. At the same time, DecisionDx-Melanoma reached a significant milestone, surpassing 230,000 test orders since launch.

We continue to build a robust body of clinical evidence across our entire portfolio, and we continue with our unwavering commitment to improving patient care. Everything we do at Castle remains focused on innovative, clinically actionable tests that help clinicians make better-informed decisions to improve outcomes for their patients. We can only accomplish this mission because of the people who call Castle home. I sincerely thank our entire team for their hard work, resilience, and commitment throughout the year. None of this progress would be possible without them.

As we review 2025 results, I will also outline how we are thinking about our growth story, starting with the drivers of our near-term performance in 2026, then turning to our midterm opportunities, and finally discussing the longer-term pipeline that we believe positions Castle well for sustained growth and value creation. Frank will then provide additional 2025 financial highlights and insight for 2026 before we turn to your questions. Let us start with our core revenue drivers and what we see as the bulk of our 2026 top-line growth story: DecisionDx-Melanoma and TissueCypher. In 2025, for DecisionDx-Melanoma, we delivered 39,083 test reports, representing 9% year-over-year growth, achieving our high single-digit volume growth commitment.

Importantly, we continue to see new clinicians ordering DecisionDx-Melanoma for the first time. Specifically, in 2025, we had 1,795 clinicians order DecisionDx-Melanoma for the very first time. This was consistent with our experience in both 2024 and 2023 and reflected continued strong interest and adoption. Additionally, total ordering clinicians over the lifetime of this test is nearing 17,000. Our compelling body of evidence for DecisionDx-Melanoma also continues to expand, with now 58 peer-reviewed publications supporting the clinical use of the test, which is not only a key driver for test adoption, but also meaningfully differentiates our test from the competition. We saw approximately 31% patient penetration exiting 2025, and we believe DecisionDx-Melanoma remains a durable growth driver in 2026.

Turning to our gastroenterology franchise, TissueCypher delivered 39,014 test reports in 2025 compared to 20,956 test reports in 2024, representing 86% growth and surpassing 80,000 tests ordered to date. We believe this adoption reflects growing clinical recognition of TissueCypher’s value in determining a patient’s individual risk of progression from Barrett’s esophagus to high-grade dysplasia or esophageal cancer. Barrett’s esophagus is the only known risk factor for development of esophageal adenocarcinoma, one of the fastest growing cancers in the U.S. Unfortunately, esophageal adenocarcinoma is also one of the most aggressive and difficult cancers to treat, with a five-year survival rate of less than 20%.

In 2024, the American Gastroenterological Association (AGA) released a clinical practice guideline for Barrett’s esophagus, stating that it can be effectively treated with endoscopic procedures like ablation, and noting that identifying high-risk patients is crucial. Importantly, TissueCypher was highlighted as the first prognostic test capable of identifying patients with Barrett’s esophagus at risk of progression to high-grade dysplasia or esophageal cancer. We believe this recognition by the AGA reinforces TissueCypher’s role in providing personalized, clinically validated risk stratification, which in turn assists clinicians and their patients in making better management decisions, with the end goal of extending the lives of high-risk patients with interventions at the precancerous state.

For the year ended 12/31/2025, we had 2,082 new ordering clinicians for the TissueCypher test, up from 1,234 in 2024. We remain highly focused on education and building awareness to drive continued adoption. With roughly 11% patient penetration for TissueCypher exiting 2025, an expanded commercial team, and the compelling clinical actionability with a high clinical need, we continue to believe TissueCypher is still in the early stages of a long runway of significant growth in 2026 and beyond. Let us move on to the midterm phase of planned potential growth, which we view as 2027 and 2028, in addition to the continued contribution of our core revenue drivers. Let us discuss our recently launched advanced ADTX test.

ADTX is our first-in-class test designed to guide systemic treatment selection for patients 12 years and older with moderate to severe atopic dermatitis. We clinically launched the test on a limited access model in late November 2025. The launch of advanced AD significantly expanded our total addressable market and reinforced our commitment to the dermatology community. Early results have exceeded our high expectations. As we announced in early January, we limited access to approximately 150 dermatological accounts in the U.S. Through year-end, we were pleased to see that more than half of these initial accounts had ordered one or more tests in the first five weeks of clinical availability.

As mentioned in our third quarter 2025 earnings call, our market research suggested a high level of clinical need and adoption. The results of the initial five weeks of clinical availability matched those expectations. In fact, through mid-February, we received close to 500 orders, continuing to reinforce our expectations for adoption from our mid-2025 market research studies. We expect to expand clinician access in a phased manner, based on a number of internal metrics. We expect revenue contribution from advanced AD to be immaterial in 2026, with material revenue contribution expected in 2027 or 2028. Based upon revenue cycle timelines, we would expect to be in a position to communicate more about reimbursement in 2026.

Lastly, moving on to the next phase of our growth strategy—the longer term, which we view as 2028 and beyond—touching our pipeline initiatives and strategic investments. Let us start with our GI pipeline. We acquired a non-endoscopic cell collection device with our acquisition of ProVise. We plan to use this collection device to gather samples for development of a test for differential diagnostic and screening support for GI diseases. We expect to initiate and enroll our first patient for the development study in 2026. This collection device requires FDA clearance, and we currently expect to both file our submission and potentially receive clearance in 2026.

Next is our collaboration with Cybase, where we will evaluate their impedance spectroscopy, or EIS, technology. We have U.S. and select country rights to a number of possible indications. The first indication we are studying is the ability of a handheld EIS device, or pen, to predict flares in patients with atopic dermatitis. We believe there are at least two additional intended uses in the atopic dermatitis population alone, should we see promising results from the initial flare prediction study. Importantly, this approach could offer a nice synergy with our advanced AD test by extending the ability to support patients across different points in their disease journey.

We expect to initiate the EIS pen study and enroll our first patient for AD flares in 2026 and have preliminary development data before the end of 2026. And to wrap up our near-, mid-, and long-term growth strategy, we continue to expect M&A to play a role.

With our strong balance sheet and history of successful execution in this area, we continue to evaluate candidates that fit within our strategic opportunities criteria: number one, tests near or at market; number two, tests near or at reimbursement; number three, tests that can be promoted within sales teams the size of our current teams or less—that is, around 100 or less; and four, tests within or complementary to our current customer verticals as a priority. In summary, we believe our financial strength positions us well to invest across our growth initiatives for continued value creation. And with that, I will now turn the call over to Frank.

Frank Stokes: Thank you, Derek, and good afternoon, everyone. As Derek noted, we delivered strong fourth quarter 2025 financial results supported by disciplined execution across the business. In the fourth quarter of 2025, we delivered total revenue of $87,000,000, resulting in $344,200,000 for the full year 2025, exceeding our guidance range. Full year 2025 outperformance was driven predominantly by our core revenue drivers, including significant year-over-year test volume growth for TissueCypher at 86%. For 2026, we anticipate generating total revenue of $340,000,000 to $350,000,000. This is growth to the mid- to high-teens over 2025 if you exclude DecisionDx-SCC and ID Genetics revenue from our 2025 and 2026 totals. We do not disclose revenue by test.

Our revenue guide reflects continued growth in our core dermatologic and gastrointestinal franchises, driven primarily by continued TissueCypher momentum, immaterial revenue expected from our advanced ADTX test, and no revenue included for DecisionDx-SCC. Our gross margin during the fourth quarter was 76.3%, compared to 76.2% in 2024, and our gross margin for the full year 2025 was 69.2% compared to 78.5% in 2024. Affecting 2025 gross margin was the loss of revenue from DecisionDx-SCC and the one-time adjustment of an acceleration of amortization of approximately $20,100,000 during the three months ended 03/31/2025.

Our adjusted gross margin, which excludes the effects of intangible asset amortization related to our acquisitions and excludes the effects of revenue adjustments in the current period associated with test reports delivered in prior periods, was 77.6% for the quarter and 79.8% for the year, compared to 81.2% in the same periods in 2024. Turning to expenses, our total operating expenses, including cost of sales, were $90,800,000 for the quarter compared to $82,300,000 for the prior year, and were $387,000,000 for the full year 2025 compared to $323,400,000 for 2024. As Derek outlined, our growth plan spans the near, medium, and long term.

In support of that plan, we expect operating expenses to increase moderately in 2026 as we continue to support and invest in our core franchises, advance our pipeline, and support key reimbursement and commercial initiatives. Sales and marketing expenses were $138,100,000 for the full year, compared to $123,500,000 for 2024. The increase is primarily driven by increased personnel costs due to both expanded headcount and compensation adjustments, higher expenses associated with training events and speaker conferences, and higher sales-related travel expenses. General and administrative expenses were $91,200,000 for the full year, compared to $76,600,000 for 2024. The increase is primarily attributable to increased personnel costs from expanded headcount and compensation adjustments and higher information technology-related costs.

Cost of sales expenses were $71,000,000 for the full year, compared to $60,200,000 for 2024, primarily due to increased personnel costs from expanded headcount and compensation adjustments and higher expenses related to services, supplies, and depreciation. R&D expenses were $51,900,000 for the full year, compared to $52,000,000 for 2024, primarily due to increased personnel costs from expanded headcount and compensation adjustments, offset by lower clinical studies costs. Total noncash stock-based compensation expense, which is allocated among cost of sales, R&D expense, and SG&A expense, was $45,900,000 for the full year, down from $50,300,000 for 2024. Interest income was $11,800,000 for the full year 2025, compared to $12,900,000 for 2024.

Our net loss for the fourth quarter of 2025 was $2,300,000, compared to net income of $9,600,000 for the fourth quarter of 2024, and our net loss for the full year 2025 was $24,200,000 compared to net income of $18,200,000 for 2024. Diluted loss per share for the fourth quarter was $0.08 compared to diluted earnings per share of $0.32 in 2024. Diluted loss per share for the full year 2025 was $0.83 compared to diluted earnings per share of $0.62 for 2024. Adjusted EBITDA for the fourth quarter was $11,500,000 compared to $21,300,000 for the comparable period in 2024. For the full year 2025, adjusted EBITDA was $44,000,000 compared to $75,000,000 in 2024.

Net cash provided by operating activities was $26,900,000 for the fourth quarter of 2025 and $64,300,000 for the full year. Looking ahead, historically, in the first quarter of the year, we have seen net operating cash use due in part to annual cash bonus payments and certain health care benefit payments that do not recur during the remaining three quarters of the year. Net cash used in investing activities was $60,400,000 for the twelve months ended 12/31/2025, and consisted primarily of purchases of marketable investment securities of $188,700,000, purchases of property and equipment, our asset acquisition of ProVise, and purchases of debt securities classified as held to maturity, partially offset by the maturity of marketable investment securities.

Capital expenditures totaled $36,000,000 in 2025. For 2025, we generated free cash flow, defined as net cash provided by operating activities less capital expenditures, of $28,300,000. We expect capital expenditures to decline in 2026. As of 12/31/2025, we had cash, cash equivalents, and marketable securities of $299,500,000. In closing, I am pleased with our strong 2025 financial results, which reflect our continued track record of disciplined execution and focus on driving long-term shareholder value. I will now turn the call back over to Derek.

Derek J. Maetzold: Thank you, Frank. Before concluding, I want to share my sincere gratitude to each and every member of the Castle team who continue to deliver meaningful impact for patients and clinicians every day. I am incredibly proud of our team and grateful for the culture that we continue to build here at Castle. In summary, we are executing on the drivers of our next phase of growth, supported by disciplined capital allocation, operational excellence, and relentless innovation, which we believe positions us well for long-term, sustainable growth and value creation. Thank you for your continued interest in Castle. We will now open for questions. Operator?

Operator: Thank you, Derek. When preparing to ask your question, please ensure that your device is unmuted locally. Finally, in the interest of hearing from as many of you as possible, please limit yourselves to one question and one follow-up if needed, and then reenter the queue for any further questions. Our first question will be from the line of Kyle Alexander Mikson with Canaccord Genuity. Please go ahead. Your line is open.

Alex Kucason: Hi. This is Alex Kucason along for Kyle Alexander Mikson. Thank you for taking our question and congratulations on a strong finish to 2025. When last we spoke in early 2026, you noted you had recently submitted new data to NCCN. Recognizing that DecisionDx-Melanoma is unique, and that it is a GEP test that has demonstrated improved patient survival and GEP score provides meaningful prognostic information beyond traditional staging alone, can you elaborate any takeaways from the recent NCCN update? And what is your level of confidence that DecisionDx-Melanoma could also maybe be included in guidelines and where does that rank in terms of level of importance? Thank you.

Derek J. Maetzold: I will try and answer what I can here. I might miss something. So I think the most important element to think about is that the U.S. standard across all of the organizations that put guidelines or recommendations for considering to perform or to avoid a sentinel lymph node biopsy surgical procedure has been 5% for several decades. And that was not changed in this update either. So it remains that if a patient and a physician or a health care provider believes the chance of having a positive node is greater than 5%, then one should consider and discuss that or encourage a patient to undergo that procedure.

As you know or may know, our data regarding DecisionDx-Melanoma has shown time and time again in both prospective studies and retrospective studies that a low-risk result from DecisionDx-Melanoma gets you comfortably below 5%, indicating that a patient can have a conversation and hopefully avoid what is an unnecessary surgical procedure. What the guidelines also showed with this update when they reviewed the Merlin-001 study is that the Merlin test fails to achieve this threshold of 5%, which we knew last year when it was published in September/October 2025. So the current guidelines would say there is not a recommendation to consider DecisionDx— I will get to this in just a minute.

There is not an acknowledgment or recommendation that the Skyline test actually gets below 5%. And in fact, they also state that it acts similarly to nomograms, which today cannot get below 5% from a population basis set. So it is a little head scratching. Now to answer your question about the outcomes data, such as our SEER publication, that was not included in the updated guidelines. I think we did a quick count. We have 58 peer-reviewed publications that review our tests for both predicting the likelihood of a sentinel lymph node biopsy outcome—being below 5% or greater than 5%—as well as survival benefits. So talking about your recurrence-free survival, distant metastasis-free survival, melanoma-specific survival.

We also have clinical use studies showing how we have safely used our test results to manage clinical care. And as you noted, we also have data from the National Cancer Institute where we match people who received DecisionDx-Melanoma as part of their clinical care with patients in the SEER database who did not receive our test as part of their clinical care and found that when care is guided with the use of our test results, there is an association with improved survival, not just overall survival—more importantly, melanoma-specific survival. It is a bit of a head scratcher.

It turns out that of those 58 articles that have been published and easily found by doing a literature search, only 11 are cited in the current guidelines, meaning 47 were not reviewed by the NCCN committee, including the one you mentioned earlier, the NCI SEER database. So that is a head scratcher about why 47 studies were ignored when what they are apparently looking for is more published evidence to support the use of our test.

Alex Kucason: Thank you. That was very helpful. And one last one for me. One thing we have not touched upon is the FDA submission for DecisionDx-Melanoma. What is your timeline on when we get the FDA approval for this test? And how will this help you in payer discussions, effectively drive higher adoption, and potentially reaccelerate test volume growth for this test? Thank you.

Derek J. Maetzold: That is a good question. So we are preparing our submission as we speak now. We believe that it will be accepted as a De Novo 510(k) submission as opposed to a PMA submission, and those timelines from the time of submission to time of clearance are pretty well scripted by the FDA. So that may be something which we would see towards the end of the year, maybe early next year. That is hard to say.

In terms of impact on clinician uptake, since that was the last part of your question, I do not know if there is any evidence that we have seen where you take a lab-developed test and move it over to an IVD-cleared device where you would see or expect a substantial change in volume uptake. There are certainly going to be clinicians out there, I think, who may be waiting for an FDA flag of approval. So maybe I am being a little too conservative there.

I think the bigger impact and the reason why we are going forward on this is looking at the newer state biomarker laws which, among other things, would indicate that across most of the states that have enacted biomarker laws, if you have an FDA-cleared or -approved device, then that qualifies for reimbursement or payment from commercial insurance carriers, with a few other caveats. And so our primary drive, to be honest, about looking to achieve 510(k) clearance was to focus on leveraging state biomarker laws to reduce nonpayments from commercial insurance carriers. So that is the value that we would see.

I think the quicker we can get that into the FDA and out of the FDA will then have a subsequent impact, I think, on our overall commercial ASP.

Alex Kucason: Thank you very much.

Operator: Next question will be from the line of Subbu Nambi with Guggenheim Securities. Please go ahead. Your line is open.

Thomas Peterson: Hey, guys. This is Thomas on for Subbu. Thanks for taking our questions. Maybe one on ADTX. Our checks indicated a high level of awareness of the test already in the field, and it looks like from your prepared comments, it looks pretty consistent. Can you just speak a bit to the strategy of your sales team approaching derms with that test, and what has led to the rapid KOL awareness?

Derek J. Maetzold: I will try to answer that question. That is interesting. I would not have guessed we had generated that much awareness depending upon the panel you guys looked at, so that is quite positive, by the way. So thank you for that. We released the test, as we talked about back in January maybe, with a limited access launch in November—so kind of five weeks of availability to roughly 150 accounts that were dermatological accounts. The majority of those were accounts that were early adopters of gene expression profile testing, so we knew that they had a predilection towards adopting new technologies for patient care.

There were also a few clinical sites that were not necessarily early adopters of gene expression profile tests, and there were also a small number of KOLs that were not involved in our studies or do not treat skin cancer. And of those, I think we had noted in January that over half of them had ordered at least one or more tests in the first five weeks, and that is a pretty good uptake, we thought, relative to Thanksgiving being in there and Christmas and Hanukkah. From a reduced office use standpoint, that felt quite positive.

And through, I think, mid-February—maybe it was last week, I cannot remember the exact date—we had received over 500 orders from the accounts that we have allowed to have initial access to. So we would concur that the interest is as high as we thought it would be relative to the market research that we completed last summer, and that continues to be the case here. As I look forward to the rest of 2026, we look at what is the current split.

Currently, we have our field force, which was 100% bonus on DecisionDx-Melanoma test results because that is the one that we have consistency of payment for, and there are some small—call them kickers or extra bonus kickers—on some group or team-based atopic dermatitis test volume growth. But, again, given we have controlled access with the limited access perspective, it will remain a 100% melanoma focus with some atopic dermatitis sprinkled in. We will probably shift that to a 90%/10% here in the second quarter going forward, but, again, still trying to control access so we can do three things. One of them is to maintain our focus and momentum on DecisionDx-Melanoma.

Two is to make sure that as we see volume expanding, our clinical laboratory and the logistics program of having to have kits available with our buffer preservation in doctors’ offices at the right time when patients walk in continues to be a seamless process so that we do not have frustration building up with our customer base in dermatology. Then third is making sure that we watch the line of ASP growth, and as we see our ASP growing along our models, then we will go ahead and release this to more and more customers.

But I would concur with you—if you are seeing a high level of awareness and enthusiasm among your physician panel—that is what we are seeing too in terms of enthusiasm.

Operator: Thank you. And our next question today will be from the line of Puneet Souda with Leerink Partners. Please go ahead. Your line is now open.

Carlos: Hey, folks. This is Carlos on for Puneet. Thanks for taking the question. I have got two about TissueCypher. The first one is if you could just give us an update on sales reps and their activity. I think last we checked, there were 65 reps, and then you got more from ProVise. Do you see yourself expanding the reps more this year, and just generally how they are contributing to the growth of that account?

Derek J. Maetzold: We continue to add to the TissueCypher sales team and will continue to do so over the course of the year as we see territories reaching volume levels that we think make it difficult to maintain a balance between maintaining and growing volume within existing customers as well as hunting for new customers. We think both dermatology and the GI specialties should not require more than 100 sales reps, and so as we see volume come in, we will be marching in a methodical fashion towards trying to get below that number. So that is where we are now and throughout the remainder of 2026.

Carlos: Okay. Thank you. And one more on TissueCypher. You talked a bit last year about an attempt to penetrate into private equity roll-ups, and it would be helpful to get an update on whether that is something you are executing on and has been driving the, frankly, really incredible growth you have been seeing. Is that still an opportunity that can drive a step-up of growth in the future, or is it something that, after research, you decided to focus your efforts in other areas? Thank you.

Derek J. Maetzold: Great question. As you look at volume in 2026, including fourth quarter volume, I do not think you or we would be able to discern back the impact on group practices or even PE groups adopting a more formal approach to saying, “Hey, we want to go ahead and treat Barrett’s esophagus patients, regardless of which GI is treating that patient, in a parallel manner.” We have seen some success in some smaller groups that would suggest as we go through 2026 that we would be able to go ahead and accrue efficiency among larger groups, and so that may contribute to some volume expansion in 2026.

But I think the volume expansion, both year-over-year and quarter-over-quarter, in TissueCypher in 2025 was largely based on the organic need of individual clinicians seeing the value of the test clinically, deciding to go ahead and try it and then adopt it further in their patient care.

Carlos: Got it. That makes sense. So this is not something, though, that you formally adopted as a strategy, or is it a strategy that you have decided to not formally adopt, focusing on these—

Derek J. Maetzold: I am sorry if I inadvertently ignored your question directly.

There is interest in large group models—I do not want to call it PE groups only, or just larger practices of gastroenterologists—saying, “Hey, we should be treating Barrett’s esophagus disease uniformly for quality standards and good patient care, as opposed to one-offs.” And so that is an important strategy that we have across the gastroenterology sales force and our strategic accounts team to say, “How do we move practices from being individual clinicians or individual patients to saying, this is a test which has clearly shown it finds people at high risk for disease progression?” We know that if you go ahead and use interventional tools—be it ablation or ablation with surgical techniques as well—you can basically remove that Barrett’s esophagus disease.

And if you remove it, it does not progress to esophageal cancer. So we know we can cure or stop patients from progressing to cancer if we know who to intervene on. And that is a very attractive commentary in terms of, “Why should the survival of me as a patient be any different than Frank’s because I see a different doctor than he does?” So I think we will see the success that we are beginning to believe we will feel come to fruition in 2026. So it is definitely a strategy that we are looking to continue to develop.

Carlos: Alright. Thanks. Really appreciate it, and congrats on the quarter.

Operator: Next question today will be from the line of Matthew Parisi with KeyBanc Capital Markets. Please go ahead. Your line is now open.

Matthew Parisi: Yes. This is Matthew Parisi on for Paul Knight at KeyBanc Capital Markets. First off, congrats on the great quarter. Just a quick question to begin would be around volumes for melanoma. I know you do not provide volume guidance, but following two consecutive years of high single-digit volume growth for the melanoma test, would it be reasonable to assume continued high single-digit volume growth for 2026?

Derek J. Maetzold: Right. Do you want to handle that?

Frank Stokes: Yes. Thanks for the question. I think we are going to see mid- to high single-digit volume growth in melanoma this year as well. We are in a very nice penetration level there, with 32% maybe of the patients being tested now, and we think something over half the physicians—maybe even 60% of the targetable physicians or clinicians—are using the test regularly. So we will continue to see that same level of growth we would expect this year.

Matthew Parisi: Thank you. And then just one more—of the roughly 100-person Salesforce team, can you give some insight to the split between derm and GI, and what would their percent be?

Frank Stokes: We do not disclose the number of reps in each Salesforce. What we have said is that we think each Salesforce can be well managed at fewer than 100 reps. I think back in April 2025 we said that the TissueCypher Salesforce had been expanded to 64, and I think we said last year also the dermatology Salesforce was in the seventies. So we are still in that vicinity. We will make expansions, as Derek highlighted earlier, this year to accommodate our continued growth. But we think we can run both sales forces under 100 for some time here.

Matthew Parisi: Awesome. Thanks so much.

Operator: Next question will be from the line of Catherine Schulte with Baird. Please go ahead. Your line is now open.

Josh: Hi, guys. This is Josh on for Catherine. Thank you for taking questions. Maybe first, could you share your expectations for TissueCypher volume growth in 2026? Do we expect this to come more from further penetration within your existing ordering base or adding new clinicians? Then where are you from a clinician penetration perspective? Thanks.

Derek J. Maetzold: I think last year we said for 2024—go ahead.

Frank Stokes: Yep. So I think for 2024, we said we had something over 1,000 new ordering physicians, and then for 2025, something over 2,000. So those two data points together get you to 3,000 clinicians, which is probably—we think—again, similar to 12,000 to 14,000 targetable clinicians in the GI space. So we are probably 25% to 30% penetrated at the clinician or HCP level. And I think if you just take the best numbers we have, on a patient basis we are about 11% penetrated. So clearly, we continue to expect volume growth this year, probably something close nominally to the growth we saw just on a nominal test basis for 2025 into 2026.

We are getting into the larger numbers, so the percent growth hurdle becomes a bit higher, and you are into the later adopter physicians. But we should see continued volume growth—maybe not quite the percentages we have seen in 2024–2025 just given where we are penetration-wise—but continue to see strong growth from a volume perspective on TissueCypher for the year.

Josh: Great. And then I was also wondering if we should expect quarter-over-quarter declines for DecisionDx-Melanoma volumes in 1Q. And then how should we think about the cadence of year-over-year volume growth throughout 2026, just given some of the tougher year-over-year comps in the back half? Thanks.

Frank Stokes: Melanoma has very predictable seasonality, and what we see is flattish sequential growth each quarter except Q1 to Q2, and it is driven primarily by physician-patient encounters and a little different than just business days. In Q1, there are a couple of large derm meetings that take place that take physicians out of their practice, so that reduces the patient encounters. We have talked before—100 tests one way or the other is still flattish on a basis of 10,000-plus tests. That is the pattern we have seen since 2021, coming out of COVID. We have seen that pattern very consistently. So you have flattish sequential growth until you get Q1 to Q2.

That tends to be your step-up, and then that new stepped-up level is durable through the next several quarters. So we would expect the same flattish performance. You can really look at the volumes we disclose each year back to 2021 and see pretty predictably what volumes look like Q4 to Q1.

Operator: The next question will be from the line of Mason Owen Carrico with Stephens. Please go ahead. Your line is now open.

Mason Owen Carrico: Hey, guys. Thanks for taking the questions here. Derek, could you give us your latest thoughts on the commercial strategy for the derm team if we were to see a positive draft LCD get published midyear for DecisionDx-SCC? Are you thinking about splitting reps’ time between melanoma, SCC, and your AD test if that were to play out?

Derek J. Maetzold: That will be a very, very nice problem to have, Mason, will it not? I think there are a couple of variable triggers there. Having the reconsideration request result in an LCD which covers it the way it was covered before by Novitas—let us assume that is a base case—I would say that we would begin to fold SCC back into the sales bag from a commission standpoint, although we have to watch for timing. It may be up to a year before you would see SCC gain reimbursement.

I think we talked about in previous years that if we see a line of sight to regaining coverage, then the question will be: do you want the run rate for that test to be $25,000,000 a year, or do you want it to be $100,000,000 a year? There are some interesting trade-offs to think through there. We think that it is probably difficult to have three tests being sold extremely well by the same person to the same customer base.

If we are faced with that opportunity, if we are seeing what we would like in terms of the reimbursement growth for the advanced AD test, then we could profitably expand our sales forces to make sure we can handle all three opportunities—DecisionDx-Melanoma, advanced AD, and the regaining of coverage for DecisionDx-SCC. We will have to see how those latter two things come out—the SCC draft timing, how confident we are that it will be finalized in three months, or will it take a year—and then also our climb in advanced AD for atopic dermatitis, and make some decisions there.

But otherwise, that has been part of our planning about how we approach that, and there are a few different variables. It will represent a very nice opportunity for patient care and for the company overall.

Mason Owen Carrico: Got it. That is helpful. And then, would you remind us when NCCN typically updates guidelines for SCC, and what new data were you able to submit ahead of that panel meeting that maybe previously were not submitted or previously were not reviewed in last year’s update?

Derek J. Maetzold: That is a good question. I might be off on the facts here, so I will state that caveat. I believe the submission that would have gone in last spring included our two papers showing the benefit to predicting adjuvant radiation therapy responsiveness. Those papers were published in mid-2024—the third quarter of 2024—so they missed the 2024 cutoffs. Those were submitted last year. Their annual in-person meeting is usually around the Mohs surgical meeting in May of each year. So if they are doing a one-year cadence of updating guidelines, maybe that comes out between now and late April or May. That will be the timing I would expect to see.

Operator: Thank you. This will conclude Q&A for today, and I would now like to hand the call back to Derek J. Maetzold for any closing remarks.

Derek J. Maetzold: This does conclude our fourth quarter and full year 2025 earnings call. We thank you again for joining us today and for your continued interest in Castle Biosciences, Inc.

Operator: Thank you. This concludes today’s conference call. You may now disconnect your lines.

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