• Fourth Quarter Revenue: $86.3 million, a 31% increase over Q4 2023.
• Full Year Revenue 2024: $332.1 million, a 51% increase over 2023.
• Total Test Report Volume Growth 2024: 36% increase compared to 2023.
• Cash, Cash Equivalents, and Marketable Securities: $293.1 million as of December 31, 2024.
• Gross Margin Q4 2024: 76.2% compared to 77.8% in Q4 2023.
• Full Year Gross Margin 2024: 78.5% compared to 75.4% in 2023.
• Net Income Q4 2024: $9.6 million compared to a net loss of $2.6 million in Q4 2023.
• Full Year Net Income 2024: $18.2 million compared to a net loss of $57.5 million in 2023.
• Diluted Earnings Per Share Q4 2024: $0.32 compared to a diluted loss per share of $0.10 in Q4 2023.
• Full Year Diluted Earnings Per Share 2024: $0.62 compared to a diluted loss per share of $2.14 in 2023.
• Adjusted EBITDA Q4 2024: $21.3 million compared to $9.4 million in Q4 2023.
• Full Year Adjusted EBITDA 2024: $75 million compared to a negative $4.4 million in 2023.
• Net Cash Provided by Operating Activities 2024: $64.9 million.
• DecisionDx-Melanoma Test Reports 2024: 36,008, an 8% increase over 2023.
• DecisionDx-SCC Test Reports 2024: 16,348, a 43% increase over 2023.
• TissueCypher Test Reports 2024: 20,956, a 130% increase over 2023.

• Warning! GuruFocus has detected 2 Warning Sign with CSTL.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Castle Biosciences Inc (NASDAQ:CSTL) reported a 51% year-over-year revenue growth, reaching $332.1 million for the full year 2024.
• The company achieved a 36% increase in total test report volume in 2024 compared to 2023.
• Castle Biosciences Inc (NASDAQ:CSTL) ended 2024 with $293.1 million in cash, cash equivalents, and marketable investment securities, a $50 million increase over the previous year.
• The TissueCypher test saw a 130% growth in test report volume in 2024, with positive reception from the gastroenterology community.
• Castle Biosciences Inc (NASDAQ:CSTL) achieved a net income of $18.2 million for 2024, compared to a net loss of $57.5 million in 2023.

Negative Points

• The DecisionDx-SCC test faces potential noncoverage by Medicare starting April 24, 2025, which could impact revenue.
• Gross margin decreased slightly in the fourth quarter of 2024 to 76.2% from 77.8% in the same period of 2023.
• The company anticipates a decrease in IDgenetix test report volumes and net revenues in 2025 due to market changes.
• Castle Biosciences Inc (NASDAQ:CSTL) expects typical seasonality to affect the first quarter of 2025, potentially leading to flat or slightly down volumes compared to the fourth quarter of 2024.
• The company faces challenges in expanding the use of DecisionDx-Melanoma in academic centers due to the absence of guideline inclusion.

Q & A Highlights

Q: In our checks, we have noticed that private dermatologists usually prefer DecisionDx-Melanoma, but dermatologists in academic centers are still hesitant to order more broadly before guideline inclusion. Do you agree? How should we think about the opportunity in the absence of guideline updates? A: Derek Maetzold, CEO: The feedback from your interviews seems contrary to the 1,800 new first-time ordering clinicians in 2024. While some clinicians may have settled into a sweet spot, we saw substantial growth in new first-time ordering clinicians. Outside of a few NCCN centers, we don't hear much feedback regarding guideline inclusion affecting personal decisions.

Q: When should we expect reimbursement updates for the atopic dermatitis gene expression profile test planned for launch by the end of 2025? A: Derek Maetzold, CEO: Assuming successful validation study results, we aim to launch in late 2025. The reimbursement strategy will be developed over the next several quarters, focusing on patient outcomes and fair reimbursement. Material revenue is not expected until 2028 or 2029.

Q: On TissueCypher and getting the New York State Department of Health approval, what percentage of the addressable market does New York State represent? A: Derek Maetzold, CEO: I don't have the exact percentage, but demographically, it should be similar to New York's population percentage of the overall US population.

Q: What's the commercial strategy for DecisionDx-SCC while resolving reimbursement issues? Will you continue to offer the test? A: Derek Maetzold, CEO: If we lose coverage, it will be disappointing for patient care. If there's a short-term path to regaining reimbursement, we may continue offering the test. If not, we'll balance shareholder impact and patient needs. We don't plan to remove the test completely.

Q: Regarding strategic opportunities with capital allocation, should we consider existing or new verticals? A: Derek Maetzold, CEO: We focus on investing in current commercial efforts and exploring external opportunities. While it's easier to expand within current verticals, we're open to new areas if they offer strong upside.

Q: With SCC likely disappearing from the topline, how should we think about adjusted EBITDA for 2025? A: Frank Stokes, CFO: We expect to remain adjusted EBITDA positive for the year, but haven't provided specific guidance on the scale.

Q: Is there any residual from non-Medicare payers and private pay on SCC? A: Frank Stokes, CFO: There is not significant private or commercial payment for SCC; it's still very early.

Q: How should we model SG&A for 2025? Is the salesforce expenditure increasing? A: Frank Stokes, CFO: We've expanded the TissueCypher salesforce, reflected in Q4 numbers. We'll continue to invest in the salesforce as we see penetration, but no sweeping changes are expected.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.