Castle Biosciences, Inc.

What they do

Castle develops and commercializes multi-analyte assays with algorithmic analysis (MAAA) that help clinicians diagnose and manage disease. Its portfolio covers dermatologic cancers (DecisionDx-Melanoma, DecisionDx-SCC, MyPath Melanoma), Barrett's esophagus (TissueCypher), uveal melanoma (DecisionDx-UM) and, since a limited launch in November 2025, atopic dermatitis (AdvanceAD-Tx). Revenue comes from third-party payors, primarily Medicare, for test reports delivered to clinicians. The company reports approximately 158 peer-reviewed articles supporting its tests.

Revenue drivers

• DecisionDx-Melanoma — Risk stratification GEP test for invasive cutaneous melanoma; estimated U.S. incidence of about 130,000 patients per year and roughly $540 million U.S. TAM. 10,280 test reports in Q2 2026 versus 9,981 in Q2 2025.
• TissueCypher — Risk stratification test for Barrett's esophagus predicting progression to high-grade dysplasia or esophageal cancer; estimated $1 billion U.S. TAM. 14,988 test reports in Q2 2026 versus 9,170 in Q2 2025, the largest growth contributor.
• DecisionDx-SCC, MyPath Melanoma, DecisionDx-UM — Additional dermatology and ophthalmology tests. In Q2 2026 DecisionDx-SCC reports fell to 4,011 from 4,762, MyPath fell to 1,061 from 1,166, and DecisionDx-UM rose to 482 from 468.
• AdvanceAD-Tx — Gene expression test guiding systemic treatment selection in moderate-to-severe atopic dermatitis, limited launch began November 2025; company cites roughly 10 million U.S. patients ages 12+ and about $33 billion TAM.

Recent performance

Second quarter 2026 revenue was $103.5 million versus $86.2 million in Q2 2025. Core test reports (DecisionDx-Melanoma and TissueCypher) rose 32% year over year; TissueCypher was the primary driver while DecisionDx-Melanoma grew modestly. Gross margin was 75% (Adjusted Gross Margin 76%), down from 77% and 80% a year earlier. The quarter produced a net loss of $2.1 million, including $11.6 million of stock-based compensation, versus net income of $4.5 million in Q2 2025; Adjusted EBITDA was $12.4 million versus $10.4 million. First half 2026 revenue was $187.2 million versus $174.2 million a year earlier.

Strategy

Management is focused on growing the core DecisionDx-Melanoma and TissueCypher franchises while containing costs, and has used acquisitions to expand Barrett's esophagus capabilities (Capsulomics/Previse, 2025). It discontinued the IDgenetix test in May 2025 and re-focused commercial efforts following the April 2025 change in DecisionDx-SCC Medicare coverage. The company is investing in clinical evidence generation, including an independent multi-center study of AdvanceAD-Tx presented in June 2026, and is positioning AdvanceAD-Tx as a growth option. It emphasizes its ADLT designations, which tie Medicare rates over the long term to the median private payor rate.

Risks

• Payor concentration — Medicare accounted for 44% of 2025 revenue and one commercial payor accounted for 16%, so reduced or adverse coverage decisions by a few payors could materially affect results.
• Variable consideration revenue recognition — Because payors may pay less than standard rates or not at all, reported quarterly and annual revenue may not reflect underlying test volume.
• Reimbursement changes to specific tests — The change in DecisionDx-SCC Medicare coverage effective April 24, 2025 contributed to lower DecisionDx-SCC test reports (4,011 in Q2 2026 versus 4,762 a year earlier).
• New product adoption — AdvanceAD-Tx remains in limited launch and has no ADLT status, so its commercial and reimbursement path is not yet established.

Outlook

Management raised full-year 2026 revenue guidance to $365-375 million from $345-355 million. It also said it now expects positive Adjusted EBITDA for the third quarter, fourth quarter and full year 2026. Guidance is supported by first-half core test report growth and by independent data on AdvanceAD-Tx, though no full-scale launch timing for that test was specified in the release.