Castle Biosciences Reports Decline in Revenues and Significant Net Loss in Q2 2025

Castle Biosciences, Inc. reported its financial results for the second quarter of 2025, revealing a slight decline in net revenues and a significant net loss compared to the same period in the previous year. For the three months ended June 30, 2025, the company generated net revenues of $86.2 million, a decrease of 0.9% from $87.0 million in the same quarter of 2024. The decline was primarily attributed to a $12.5 million drop in revenue from dermatologic tests, particularly the DecisionDx-SCC test, which faced reduced average selling prices following the loss of Medicare coverage. In contrast, non-dermatologic tests, particularly the TissueCypher test, saw an increase in revenue of $11.7 million, reflecting a growing demand.

The company's operating expenses for the second quarter increased by 10.3% to $90.4 million, up from $82.0 million in the prior year. This rise was driven by higher costs in sales, general and administrative expenses, which rose by 13.7% to $58.1 million, and a 21.4% increase in the cost of sales. The overall operating loss for the quarter was $4.3 million, a stark contrast to the operating income of $5.0 million reported in the same quarter of 2024. The net income for the quarter was $4.5 million, down 49.3% from $8.9 million in the previous year, reflecting the impact of increased expenses and lower revenues.

In terms of strategic developments, Castle Biosciences completed the acquisition of Capsulomics, Inc. in May 2025, which was recorded as an asset acquisition. This acquisition is expected to enhance the company's product offerings and market position. Additionally, the company discontinued its IDgenetix test offering, which has led to a significant increase in amortization expenses related to acquired intangible assets, totaling $30.3 million for the first half of 2025 compared to $4.5 million in the same period of 2024.

Operationally, Castle Biosciences reported a total of 50,976 test reports delivered in the first half of 2025, marking a 10.8% increase compared to the same period in 2024. The growth was driven by a 102.2% increase in TissueCypher test report volumes, while dermatologic tests also saw increased volumes. The company’s employee headcount rose to 798 as of June 30, 2025, up from 703 a year earlier, reflecting its ongoing investment in expanding its workforce to support growth.

Looking ahead, Castle Biosciences anticipates that its existing cash and cash equivalents, along with marketable investment securities totaling $193.7 million, 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 loss of Medicare coverage for certain tests on its financial performance. The management remains focused on expanding its product offerings and enhancing reimbursement coverage to drive future growth.