Castle Biosciences Reports $501,000 Net Loss in Q3 2025, Revenue Decline in Dermatologic Tests

Castle Biosciences, Inc. reported a net loss of $501,000 for the third quarter of 2025, a significant decline from a net income of $2.3 million in the same period last year. For the nine months ending September 30, 2025, the company recorded a net loss of $21.8 million, compared to a net income of $8.7 million for the same period in 2024. Total revenues for the third quarter decreased by 3.2% to $83.0 million, while revenues for the nine months increased by 4.7% to $257.2 million, driven primarily by growth in non-dermatologic tests, particularly the TissueCypher test.

The company experienced a notable shift in its revenue composition, with dermatologic test revenues declining by $16.5 million, largely due to a decrease in the average selling price of the DecisionDx-SCC test following the loss of Medicare coverage in April 2025. In contrast, non-dermatologic test revenues increased by $13.8 million, reflecting a 90.5% increase in test report volumes for the TissueCypher test. The overall gross margin for the third quarter was 74.7%, down from 79.2% in the prior year, attributed to higher costs associated with personnel and lab services.

Castle Biosciences has made strategic moves to enhance its product offerings, including the acquisition of Capsulomics, which was recorded as an asset acquisition in May 2025. This acquisition is expected to bolster the company's capabilities in developing diagnostic tests. Additionally, the company plans to launch a new test, AdvanceAD-Tx, in November 2025, aimed at guiding treatment for patients with atopic dermatitis. The company has also discontinued its IDgenetix test, which was previously aimed at guiding mental health medication selection.

Operationally, Castle Biosciences has expanded its workforce, increasing its employee count to 823 as of September 30, 2025, up from 710 a year earlier. The company continues to invest in research and development, with R&D expenses totaling $38.3 million for the nine months ended September 30, 2025. The company’s cash and cash equivalents stood at $85.6 million, down from $119.7 million at the end of 2024, while marketable investment securities increased to $202.0 million from $173.4 million.

Looking ahead, Castle Biosciences anticipates that its existing cash reserves and marketable securities will be sufficient to fund operations for at least the next 12 months. However, the company acknowledges the potential impact of macroeconomic conditions and the ongoing uncertainty surrounding Medicare coverage for its tests on future performance. The management remains focused on expanding its product portfolio and enhancing reimbursement rates to drive revenue growth.