Castle Biosciences ((CSTL)) has held its Q3 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Castle Biosciences’ recent earnings call painted a picture of robust growth tempered by some financial challenges. The company reported strong revenue growth and the successful launch of a new dermatological test, AdvanceAD-Tx. However, it also faced a decline in gross margin, a net loss, and uncertainties surrounding SCC reimbursement. Despite these hurdles, Castle Biosciences’ strategic initiatives and positive momentum suggest a well-balanced performance overall.
Launch of AdvanceAD-Tx
Castle Biosciences announced the launch of AdvanceAD-Tx, a groundbreaking test designed to guide systemic treatment selection for patients with moderate to severe atopic dermatitis. This marks a significant milestone in dermatological precision medicine, offering new hope for personalized treatment strategies.
Revenue Growth and Guidance Increase
The company reported revenue of $83 million for the third quarter and raised its 2025 revenue guidance to between $327 million and $335 million, up from the previous range of $310 million to $320 million. This upward revision reflects the company’s confidence in its growth trajectory.
Record Test Report Volume
Castle Biosciences achieved a record test report volume of 26,841, with core revenue drivers growing by 36% compared to the third quarter of 2024. Notably, DecisionDx-Melanoma reports increased by 12% year-over-year, surpassing 10,000 reports for the first time in a single quarter.
TissueCypher Achievements
The TissueCypher test delivered 10,609 reports, marking a 75% year-over-year growth and exceeding 10,000 test reports in a single quarter for the first time. This achievement underscores the test’s growing acceptance and utility in the market.
Positive Market Feedback for AdvanceAD-Tx
The market has responded positively to the AdvanceAD-Tx test, with approximately 80% of clinicians sampled indicating they would definitely or probably use the test. This feedback highlights the test’s potential to match treatments to immune profiles effectively.
Strong Cash Position
As of September 30, 2025, Castle Biosciences reported a strong cash position with $287.5 million in cash, cash equivalents, and marketable securities, supported by healthy cash flow from operations.
Gross Margin Decline
Despite the positive revenue growth, the company’s gross margin declined to 74.7% from 79.2% in the third quarter of 2024. The adjusted gross margin also saw a decrease, reflecting higher personnel and laboratory costs.
Net Loss Reported
Castle Biosciences reported a net loss of $0.5 million for the third quarter of 2025, compared to a net income of $2.3 million in the same period last year. This shift underscores the financial challenges the company is navigating.
Uncertainty in SCC Reimbursement
The company is facing uncertainty in SCC reimbursement, as reconsideration requests for SCC test coverage by Medicare contractors were accepted but without a specified timeline for a final decision. This creates potential future reimbursement challenges.
Operating Expense Increase
Total operating expenses increased to $89.8 million from $80.7 million in the third quarter of 2024, driven by higher personnel costs and marketing expenses. This increase reflects the company’s investment in growth and market expansion.
Forward-Looking Guidance
Castle Biosciences provided a robust outlook during the earnings call, raising its full-year revenue guidance to between $327 million and $335 million. This optimistic revision follows a strong quarter, with significant growth in test report volumes and the successful launch of new products. Despite a slight decline in gross margin, the company remains focused on strategic initiatives and disciplined execution to drive long-term growth and shareholder value.
In summary, Castle Biosciences’ earnings call highlighted a company on a strong growth trajectory, with significant achievements in test volumes and new product launches. While financial challenges such as declining gross margins and a reported net loss were noted, the overall sentiment was positive, reflecting confidence in the company’s strategic direction and future prospects.