Castle Biosciences (CSTL) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue grew 21% year-over-year to $88 million, driven by strong test volume growth, especially in non-dermatologic tests like TissueCypher, and core test volumes up 33%.

• DecisionDx-Melanoma surpassed 200,000 cumulative test orders, reflecting strong adoption and multiple new studies validating its clinical value.

• Announced definitive agreement to acquire Previse, expanding GI offerings and pipeline; aligns with growth and capital allocation strategies.

• Discontinued IDgenetix mental health test effective May 2025 due to market and reimbursement challenges, resulting in a $20.1 million one-time amortization expense.

• Received Top Workplace USA award for the fourth consecutive year.

Financial highlights

• Q1 2025 revenue: $88 million (+21% YoY); adjusted revenue: $87.2 million (+22% YoY); Adjusted EBITDA: $13 million (up from $10.5 million prior year).

• Adjusted gross margin: 81.2% (vs. 80.5% prior year); GAAP gross margin: 49.2% (down from 77.9%), impacted by $20.1 million one-time amortization expense.

• Net loss: $25.8 million (vs. $2.5 million prior year); adjusted net loss per share: $0.20 (vs. $0.09 prior year).

• Cash, cash equivalents, and marketable securities: $275.2 million as of March 31, 2025.

• Net cash used in operating activities: $6 million in Q1 2025; investing activities used $22.4 million.

Outlook and guidance

• 2025 revenue guidance raised to $287–$297 million (previously $280–$295 million), reflecting confidence in continued growth.

• Expects high single-digit volume growth for DecisionDx-Melanoma in 2025.

• Adjusted gross margin expected in the mid-70% range for the remainder of 2025.

• Positive net cash flow from operations expected for full year 2025.

• Pipeline expansion includes atopic dermatitis gene expression profile test, expected to launch by end of 2025 pending validation.