管理層發言
Good afternoon, and welcome to the Castle Biosciences Second Quarter 2026 Conference Call. As a reminder, today's call is being recorded. We will begin today's call with opening remarks and introductions, followed by a question-and-answer session. I would like to turn the call over to Camilla Zuckero, Vice President, Investor Relations and Corporate Affairs. Please go ahead.
Thank you, operator. Good afternoon, everyone. Welcome to Castle Biosciences Second Quarter 2026 Results Conference Call. Joining me today are Castle's Founder, President and Chief Executive Officer, Derek Maetzold; and Chief Financial Officer, Frank Stokes. Information recorded on this call speaks only as of today, July 30, 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 in 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.
Thank you, Camilla, and good afternoon, everyone. What a great quarter. Our team across all areas of Castle did a phenomenal job in executing on our growth plans and pulling it through the business, including revenue on the top line in evidence development and clinical research. Thanks to the efforts by our team and the clinical value that our clinicians see in the actionability of our tests, we delivered revenue of $103.5 million, 20% growth compared to the second quarter of 2025. Furthermore, if we exclude DecisionDx-SCC and IDgenetix revenue for both 2026 and 2025, our revenue growth for the second quarter of 2026 was 40% compared to the second quarter of 2025. Test report volume for our core revenue drivers grew 32% compared to the second quarter of 2025. Our strong second quarter results reflect the continued execution of our growth strategy and that we remain focused on investing thoughtfully in the future growth of Castle. We continue to invest in commercial resources to drive adoption of our tests, generate the clinical evidence needed to support reimbursement and expand adoption, advance pipeline opportunities across our dermatology and gastroenterology offerings and add the laboratory capacity, technology and personnel needed to support future growth. Supported by our robust balance sheet, we believe these investments position us to capitalize on the opportunities across our current portfolio and pipeline while maintaining a disciplined approach to capital allocation. We believe we will continue this positive momentum in the second half of 2026, and our strong second quarter performance gives us the confidence to raise our 2026 total revenue guidance to $365 million to $375 million compared to the previously provided guidance of $345 million to $355 million. Now I will walk you through the business highlights from the second quarter, and then Frank will provide additional financial highlights before we turn to your questions. Let's start with our core revenue drivers for 2026, DecisionDx-Melanoma and TissueCypher. For DecisionDx-Melanoma, we delivered 10,280 test reports in the second quarter, representing 3% growth compared to the second quarter of 2025. We are on track to meet our expectations of mid- to high single-digit volume growth for the full year 2026 over 2025. DecisionDx-Melanoma test volume also increased approximately 3% in the second quarter of 2026 compared with the first quarter of 2026, representing moderate sequential growth, though below the sequential increase we typically see based upon historical seasonality. We believe this moderate sequential growth was due in part to our commercial team adapting its customer engagement model to support three products within the same customer call. This is a deliberate investment in the growth of our business. DecisionDx-Melanoma remains the established foundation of our dermatological commercial portfolio, while the additional products, DecisionDx-SCC and AdvanceAD-Tx expand the value we can provide the same customer base and support growth over the medium and long term. Additionally, we continue to generate a substantial body of evidence to support the clinical performance and use of our DecisionDx-Melanoma test. In fact, during the second quarter, we were pleased to announce the publication of a prospective multicenter study demonstrating DecisionDx-Melanoma outperformed the Melanoma Institute Australia Nomogram, or MIA, in identifying patients at low and high risk of sentinel lymph node (biopsy) positivity. Importantly, patients predicted to be low risk by DecisionDx-Melanoma — that is, they were predicted to have a sentinel lymph node positivity rate of less than 5% — had an actual observed sentinel lymph node positivity rate of just 2.6%, well below the National Comprehensive Cancer Network, or NCCN, 5% threshold used to consider avoiding a sentinel lymph node biopsy surgical procedure. These findings further demonstrate the value of integrating tumor biology with clinicopathologic factors to improve risk assessment, support more informed risk-aligned care and help identify patients who may safely forgo the sentinel lymph node biopsy surgical procedure. Now let's turn to our TissueCypher test. During the quarter, we delivered 14,988 TissueCypher test reports, representing 63% growth compared to the second quarter of 2025. Based upon trends for the first half of the year, we believe our 2026 test report volume for TissueCypher will trend toward 50% to 52% growth compared to 2025. Now let's move on to our AdvanceAD-Tx test. During the second quarter, we delivered more than 1,000 orders. Given the test's ability to guide systemic treatment selection for patients ages 12 and up with moderate to severe atopic dermatitis, we were particularly pleased that AdvanceAD-Tx was recently recognized with the Genomics Innovation Award in the 10th annual MedTech Breakthrough Awards program. In addition, we are encouraged by a new independent real-world clinical utility study for AdvanceAD-Tx presented in June at the Revolutionizing Atopic Dermatitis meeting. In this multicenter study, only 54.3% — just over half — of patients receiving baseline systemic therapy were initially on pathway-concordant treatment. However, following testing with our AdvanceAD-Tx, 97.8% of patients were initiated on molecularly concordant systemic therapy. The impact of AdvanceAD-Tx on assisting clinicians and patients with making molecularly aligned therapy decisions aligns with the market research we conducted in the summer and fall of 2025. That is: clinicians are searching for tools, in this case our AdvanceAD-Tx test, to assist them in making more informed, better therapy selections that align with an individual patient's underlying disease biology. And with that, I will now turn the call over to Frank.
Thank you, Derek, and good afternoon, everyone. Reiterating Derek's statement, we're proud to report excellent financial results for the second quarter of 2026. Revenue was $103.5 million for the quarter, driven by continued strength in our core revenue drivers, primarily TissueCypher test volume growth and some improvement in ASP due in part to modifications in our accrual processes that were implemented earlier this year. For 2026, we are raising our revenue guidance to $365 million to $375 million, up from the previously provided range of $345 million to $355 million. Our gross margin during the second quarter of 2026 was 74.9% compared to 77.3% in the second quarter of 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 76.3% for the quarter compared to 79.5% for the same period in 2025. For the full year 2026, we continue to expect our adjusted gross margin to be in the low to mid-70s range. Turning to expenses, our total operating expenses, including cost of sales for the second quarter of 2026, were $106.6 million compared to $90.4 million for the second quarter of 2025. Sales and marketing expenses for the quarter were $40.9 million compared to $35.1 million for the same period in 2025, primarily driven by higher personnel costs, higher expenses associated with travel and higher business administration costs. General and administrative expenses were $25.2 million for the quarter compared to $22.9 million for the same period in 2025, primarily attributable to higher personnel costs. Higher personnel costs reflect headcount expansions in our administrative functions as well as merit and annual inflationary wage adjustments for existing employees. Cost of sales expenses were $23.7 million in the second quarter of 2026 compared to $17.6 million in the second quarter of 2025, primarily due to higher expenses for lab supplies, higher personnel costs and higher lab services costs. The increase in lab supplies and lab services costs reflects higher test report volumes. Increases in personnel costs reflect a higher headcount due to additions made to support business growth in response to growing test report volumes as well as merit and annual inflationary wage adjustments for existing employees. R&D expenses were $14.5 million for the quarter compared to $12.8 million for the same period in 2025, primarily due to higher personnel costs driven by increased headcount to support continued business growth as well as increased advisory board, clinical trial and travel costs related to our pipeline initiatives. Total noncash stock-based compensation expense, which is allocated among cost of sales, R&D and SG&A expense, was $11.6 million for the second quarter of 2026 compared to $11.2 million in the second quarter of 2025. Interest income was $2.4 million for the second quarter of 2026 compared to $2.9 million in the second quarter of 2025. Our net loss for the second quarter of 2026 was $2.1 million compared to net income of $4.5 million for the second quarter of 2025. Diluted loss per share for the second quarter was $0.07 compared to diluted earnings per share of $0.15 for the same period in 2025. Adjusted EBITDA for the second quarter was $12.4 million compared to $10.4 million for the comparable period in 2025. We continue to support and invest in growth initiatives while focusing on thoughtful expense control. We expect to achieve positive adjusted EBITDA for the third quarter, the fourth quarter and the full year 2026, and absent any strategic direction shift, as well as for the full year 2027. Net cash provided by operating activities was $15.2 million for the second quarter of 2026, and net cash used in operating activities was $6.9 million for the six months ended June 30, 2026. Net cash used in investing activities was $41.8 million for the six months ended June 30, 2026, and consisted primarily of purchases of marketable investment securities of $109.6 million, purchases of property and equipment, partially offset by the maturities of marketable investment and debt securities, along with the sale of equity securities. As of June 30, 2026, we had cash, cash equivalents and marketable investment securities of $266.8 million. Our strong balance sheet continues to provide financial flexibility to invest in our growth priorities. In closing, we delivered strong financial results through the first half of the year, continuing our long-standing history of consistent execution and performance excellence. I'll now turn the call back over to Derek.
Thank you, Frank. In summary, we continue to execute at a high level, and I'm encouraged by the momentum we're carrying into the remainder of the year. None of this will be possible without the dedication of the entire Castle team, and I'm proud of what they have accomplished through their unwavering commitment to improving patient care. Thank you for your continued interest in Castle. Now we will be happy to take your questions. Operator?
分析師問答
Please follow the operator's instructions to ask a question. Our first question comes from Max Masucci with ROTH Capital Partners.
Congrats on a great quarter. So first question on AdvanceAD-Tx. Nice to see the unanimous panel vote for the crosswalk. I would love to get your initial thoughts on the rate associated with the crosswalk, whether the decision matched your expectations, and any updated expectations around the transition to a full commercial launch?
Yes. Good question, Max. So first of all, in our analysis and before we submitted our request to be crosswalked to that code, we believed that was the most appropriate code. The crosswalk code is for a test that predicts drug response in patients with psoriasis. AdvanceAD-Tx predicts systemic drug response in people with atopic dermatitis, using a similar technology approach. So we thought that was the appropriate crosswalk to pursue. The panel did vote 21 to 0 in favor of crosswalking. The rate of $3,675 is a very strong rate for our test, so we are quite pleased with the panel's recommendation. CMS will take that input into account, and we expect to see preliminary draft 2026 CLFS rate schedules in late September. The CLFS effective January 1, 2026 will give us a good benchmark for conversations with commercial payers regarding reimbursement rates. So it positions us well to open up a full commercial launch in the future.
That's great. Second question, can you give a bit more detail around the TissueCypher ASP trends in the second quarter? Any one-timers? And with the $20 million guidance raise, is that mostly captured by the improved TissueCypher volume growth outlook, or is there any expectation for improved ASP for TissueCypher?
Yes, we did have some pickup in ASP, Max. We've been selling the test long enough now that we have more experience in terms of expected rates and actual collective rates, and so we were able to increase the ASP a bit in the first half of this year. Now having said that, I wouldn't expect to see the same stepwise increase in the back half. We are evaluating our payer experience and comparing that to our expectations, but I would not expect to see a repeat of that same increase. So most of the raise in our guidance here is based on performance to date and continued performance of our two primary revenue drivers, DecisionDx-Melanoma and TissueCypher.
Our next question comes from Thomas Flaten with Lake Street Capital.
Congrats on the quarter. Two questions. Given the volume growth on TissueCypher, anything you can share with us with respect to sales force expansion to really keep maximizing on this opportunity?
We have continued to expand as we see territories hitting a forward-looking $2.5 million to $3 million in revenue. We don't provide specific headcount numbers, but we're operating around 100 sales representative territories across both our gastroenterology division and our dermatology division. We think that's probably close to where it needs to be from a TissueCypher and dermatology standpoint. That being said, we had expansions last year and late in the second quarter of this year, so we aren't even seeing the full fruits of those expansions yet. We feel comfortable that we are on track for year-over-year volume growth of around 50% to 52% for TissueCypher, which we believe is very positive.
Got it. And then in the DETECT-AD study that you're doing with SciBase, how much of a window do you need to have a clinical effect from a preventative perspective? How early does the test need to detect potential flares?
I think that's to be determined based on our market research, interactions with our investigators and our medical dermatologists. Clinicians have said high-potency steroids can be started within a couple of days, and topical JAK inhibitors also work quickly. So you could say as short as one to two days in advance could be meaningful. We'd like to see if we can detect earlier than that to give patients time to use less high-powered topical therapies to keep control of symptoms. The patient research we did recently indicates an acute need for tools that help patients understand and control their disease, similar to diabetics monitoring glucose. We believe there is a range of how far in advance the device could detect a flare that would be clinically meaningful. On the back end, once a flare resolves, the device could help determine how long to stay on rescue medications before tapering. It could enable patients to taper quicker if appropriate or stay on longer if underlying disease activity persists. Another exciting potential is helping patients optimize injection frequency or oral therapy dosing to reduce medication exposure while maintaining control. Currently, clinicians often manage this empirically; the device could provide data to personalize that approach.
Our next question comes from Mason Carrico with Stephens Inc.
This is Ben on for Mason. On the Q1 call, you noted that you started to see some quarterly seasonality beginning to emerge for TissueCypher. Do you see any of that seasonality continue to play out in Q2? How should we think about the quarterly pacing for that test in the balance of the year? And looking ahead to next year, should we expect similar seasonality?
Frank, do you want to take that or should I?
Ben, as tempting as it is to look sequentially, I think it's best to look at a trend line. If you look at TissueCypher over multiple quarters, it's pretty steady growth. We had a slightly lower Q1 and a higher Q2; if you smooth that over four quarters, you get a consistent trend. So first, look at the multi-quarter pathway. The seasonality we saw in Q1 did seem to be driven by fewer patient encounters, and similar trends may continue, but we will focus on year-over-year and multi-quarter trends rather than just sequential quarter-to-quarter.
Got it. That makes sense. And then among the AdvanceAD-Tx orders you've received to date, are you seeing any signs of repeat ordering or increasing utilization among the initial cohort of accounts, or is that still mostly first-time trial orders?
I don't have the raw data in front of me to answer quantitatively, Ben. My recollection from our last review is that we are seeing both new ordering customers as we release the test to additional customers and get staff trained on the noninvasive scraping technique and get kits into offices. We are seeing the new ordering adoption we expect given the sales emphasis. We have very few clinicians who have been one-and-done; we do see heavy repeat users.
Our next question comes from Subbu Nambi with Guggenheim Securities.
This is Ethan on for Subbu. What are your top priorities for R&D investments this year? And how much do you expect R&D to increase year-over-year?
I'm sorry, I cut you off. We will continue to see some increase in R&D as we focus on newly internally developed programs. We've said before we're very excited about the pipeline and the evolution of Castle from a single primary product at IPO to two therapeutic areas with multiple products in each pipeline. So we will see some increase. It's a deliberate investment; we are running Castle for near-term growth and mid- and long-term growth to ensure long-term value creation well past 2030 and 2035. In terms of priority, it will continue to be programs within our existing therapeutic areas that align well with our commercial footprint.
Our next question comes from Matthew Parisi with KeyBanc Capital Markets.
This is Matthew Parisi on for Paul Knight at KeyBanc Capital Markets. Congrats on the great quarter. You guys had a pickup in SCC volumes for the first time since it lost coverage and you stopped marketing the test. Could you provide some color on what is driving the resurgence?
SCC volume?
I think the number one driver of SCC volumes is the clinical value existing customers see in the test and how they use it to manage their patients' high-risk squamous cell carcinomas. In the first quarter, we encouraged our sales force to maintain focus on cutaneous melanoma, but to spend some time on AdvanceAD-Tx and the squamous cell carcinoma test because they add clinical value. So it's a combination of existing users, more working days in the second quarter, and some return to promotional time with our sales force.
And then if you could provide an update on the Previse GI pipeline test.
When we acquired Previse, we licensed a portfolio of IP from Johns Hopkins that included a tissue-based assay called Esopredict, which we made available earlier this year as a reflex or backup test in cases where we couldn't get a TissueCypher result. TissueCypher remains the most well-documented, highest-value test to predict progression of Barrett's disease to high-grade dysplasia or cancer. Regarding the cell collection device, it uses a sponge within a capsule attached to a string that you swallow; the capsule dissolves, the sponge expands in the lower esophagus, and you pull the sponge back out on the string to collect cells. We have protocols for cell collection devices in design and ready to go, and I would say an update on timing for that is likely in the first half of next year.
Our next question comes from Kyle Mikson with Canaccord Genuity.
This is Alex on for Kyle. Congrats again on the strong quarter. You're about halfway through the year now. On TissueCypher, you exited 2023 at about 26% patient penetration with about 2% to 3% incremental penetration each of the next two years, exiting 2025 at about 31%, and you followed that up with a really strong first half and particularly Q2. There's a lot of runway here: could you qualify the opportunity ahead for this test? Does any low-hanging fruit remain, or will you need step-ups in expenses to reach the rest of this opportunity over time? Trying to get a sense of how durable this level of growth is going forward.
Just to clarify, we think we exited 2025 at about 10% to maybe 11% or 12% patient penetration of the addressable market. The numbers we provided today would get us to maybe 15%, middle teens. Certainly we'll begin to face the headwinds of larger numbers — by definition, the easier physicians to convert are the first ones, and those later may take more work. At this stage, though, there are still many physicians who haven't yet had the chance to be educated on the clinical benefit of TissueCypher for Barrett's esophagus patients. So there's lots of runway as we convert those physicians. Over time we'll move into a more mature phase, but the test has a long way to go.
Got it. And on the Novitas LCD, which impacts the Pittsburgh lab, and the MolDX LCD, which impacts the Phoenix lab, does mid-2027 remain a reasonable timeframe for potential return of payment for SCC? And importantly, have there been any recent discussions or review of new data that increase confidence in the ability to reverse one of these decisions specifically?
We have no public commentary about data discussions with either Medicare contractor. There is no timeline for their response, and we have not heard anything negative. We modeled that it could take roughly a year to have a Medicare contractor work through a reconsideration request, which could put us in the second half of 2026 for a draft, and then about a year later for final coverage, which would be mid-2027 timing for return of payment. If we see a positive draft LCD in the latter half of 2026, regaining coverage roughly a year later would be a reasonable expectation. We are generating additional publications and evidence to support coverage decisions for Medicare beneficiaries.
The next question comes from Mark Massaro with BTIG.
This is Megan on for Mark. Curious about the FDA Breakthrough Device designation. Can you give any additional color or a ballpark range for the timing of FDA approval?
I would separate breakthrough designation and approval. The Breakthrough Device designation enables us to go to the front of the line and get special features in the review of a submission. We haven't publicly discussed exact timing of a submission, but I would think we might expect to have FDA clearance or approval maybe later this year or early next year. The Breakthrough designation gives us an opportunity to strengthen the engagement with FDA and potentially accelerate the review.
Awesome. And you continue to deliver strong unit growth in melanoma volumes this quarter. Have you seen any changes in the competitive environment in melanoma over the recent months?
We discussed on the first quarter call that we expected a high year-over-year growth rate and that at the end of the year we'd likely come in at mid- to high single-digit growth. We're on track to achieve our internal goals. The promotional responsiveness and the perceived clinical value of our test in the marketplace haven't changed significantly.
The next question comes from Puneet Souda with Leerink.
This is Philip on for Puneet. Congrats on a great quarter. I want to double-click on volume growth this quarter for TissueCypher. A big step-up both year-over-year and sequentially after the seasonal dip in Q1. Can you talk more about what drove that reacceleration? Was it mostly seasonal combined with execution, or was there anything else in terms of growth mix or depth of use that played a role?
Frank?
We don't yet have the procedures data for Q2. As we noted earlier, Q1 was lower in terms of upper endoscopy procedures than prior quarters. I believe Q2 had more procedures than Q1. The important focus is the multi-quarter trend; if you look at where TissueCypher has been over the last three or four quarters, you see steady, consistent growth. So we think Q2 is in line with that trend and reflects solid increased penetration.
Got it. That makes sense. Did you see any impact from ACA disenrollment on your test volumes this quarter with enhanced marketplace subsidies lapsed and coverage down in 2026? Are you seeing it in ordering volumes or shifts toward self-pay that pressure collections? Is AdvanceAD-Tx, which is younger and more commercially insured, more exposed than melanoma and TissueCypher, which are more Medicare skewed?
We don't have visibility to comment on that. I don't recall our reimbursement team reporting a change in the mix of commercial, Medicare, Medicare Advantage or Medicaid patients in Q2. Medicaid exposure has always been very low. If fewer people are going to doctors because they disenrolled from insurance, we don't have a way to see that in our data at this time.
Our last question comes from Robbie Bamberger with Baird.
This is Josh on for Robbie. First, regarding the lower-than-expected seasonal volumes for DecisionDx-Melanoma in Q2, given the sales force items you mentioned, what informs confidence in that mid- to high single-digit growth for the year? How should we think about year-over-year volume growth in Q3 and Q4 for the test?
We have internal modeling similar to external models, and based on what we see in our model versus actuals, we believe we're tracking to mid- to high single-digit growth for the year. For the third and fourth quarters, I would suggest taking our first half performance and using that as a basis to estimate how you get to the full-year volume growth target.
Great. And how are you thinking about the progression of AdvanceAD-Tx rollout for the rest of the year? Any plans to broaden rollout and, by year-end, how many clinician offices are you targeting as part of a phased approach?
We are managing field-based expectations. For the remainder of the year, certainly in Q3, our dermatology field force is roughly 80% to 85% focused on cutaneous melanoma from a call and commission perspective, with the remaining 15% weighted to AdvanceAD-Tx and some to SCC. That balance is intended to support near-term, midterm and long-term needs without sacrificing melanoma focus. As we create demand and model collections against internal collection models, toward the end of Q3 and into the latter half of the year we will be better positioned to open up more deployment in 2027.
We have reached the end of the question-and-answer session. I would now like to turn the floor back over to Derek Maetzold for closing comments.
Thank you, operator. This concludes our second quarter 2026 earnings call. We thank you again for joining us today and for your continued interest in Castle Biosciences.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.