Castle Biosciences Inc (CSTL) 2025 Q4 法說會逐字稿

Good afternoon and welcome to Castle Biosciences Fourth quarter and full year 2025 conference call. (Operator Instruction) Camilla Zuckero, Vice President of Investor Relations and Corporate Affairs.

Thank you, operator. Good afternoon, everyone. Welcome to Castle Biosciences Fourth quarter and full year 2025 results conference call. Joining me today are Castle's Founder, President, and Chief Executive Officer, Derek Maetz old, and Chief Financial Officer, Frank Stokes. Information recorded on this call speaks only as of today, February 26, 2026. Therefore, if you are listening to the replay or reading the transcript of this call, any time sensitive information may no longer be accurate. A recording of today's call will be available on the investor relations page of the company's website for approximately three weeks following the conclusion of the call.

Before we begin, I would like to remind you that some of the statements made today will contain forward-looking statements, including statements about expected addressable markets, statements containing projections regarding future events, or our future financial or operational results and performance, including our anticipated 2026 total revenue and the impact of our investments and growth initiatives, including our ability to achieve long-term growth and drive stockholder value. Forward-looking statements are based upon current expectations that involve inherent risks and uncertainties, and there can be no assurances that the results contemplated in these statements will be realized. A number of factors and risks could cause actual results to differ materially from those contained in these forward-looking statements. Please refer to the risk factors in our most recent SEC filings for more information.

The forward-looking statements speak only as of today, and we assume no obligation to update or revise these forward-looking statements as circumstances change. In addition, some of the information discussed today includes non-GAAP financial measures such as adjusted revenue, adjusted gross margin, and adjusted EBITDA that have not been calculated in accordance with US GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which has been posted on the investor relations page of the company's website. I will now turn the call over to Derek.

Thank you, Camilla, and good afternoon, everyone.

We close out a strong 4th quarter and delivered an outstanding year in 2025, driven by continuing momentum across our core revenue drivers, discipline, execution, and the dedication of our employees.

I'm intentional in mentioning the dedication of our employees. It is through their efforts that we're able to deliver clinically actionable results with our current commercial tests today and tomorrow with the addition of future tests.

With fourth quarter revenue of $87.0 million we delivered revenue of $344.2 million for the full year of 2025, excluding Decision to excess CC and IDgenetix revenue from both 2025 and 2024. Our revenue growth for the year would have been approximately 34%.

For the full year we also delivered total test report volume of 105,053 test reports from our core revenue drivers, increasing 37% compared to 2024, highlighted by continuing momentum in tissue cipher report volume, which achieved 86% growth over 2024.

As I reflect on our many accomplishments across our gross initiatives, we have succeeded in evolving capital considerably.

Over the course of 2025, we completed the acquisition of Provis, entered into a collaboration and license agreement with Sybase, launched our first in class AdvanceAD-Tx test, further strengthened our commercial teams, and continued to solidify an already strong balance sheet.

At the same time, DecisionDx-Melanoma reached a significant milestone, surpassing 230,000 test orders since launch, and we continue to build a robust body of clinical evidence across our entire portfolio.

And we continue with our unwavering commitment to improving patient care. Everything we do at cosA remains focused on innovative, clinically actionable tests that help clinicians make better informed decisions and improve outcomes for their patients.

We can only accomplish this mission because of the people who call Castle home.

I sincerely thank our entire team for their hard work, resilience, and commitment throughout the year. None of this progress would be possible without them.

As we review 2025 results, I will also outline how we are thinking about our growth story, starting with the drivers of our near-term performance in 2026, then turning to our mid-term opportunities and finally discussing the longer-term pipeline that we believe positions Castle well for sustained growth and value creation. Frank will then provide additional 2025 financial highlights and insight for 2026 before we turn to your questions.

Let's start with our core revenue drivers and what we see as the bulk of our 2026 top-line growth story, Decision DX melanoma and tissue ciphering.

In 2025 for DecisionDx-Melanoma, we delivered 39,083 test reports representing 9% of year over year growth, achieving our high single-digit volume growth commitment.

Importantly, we continue to see new clinicians Ordering DecisionDx-Melanoma for the first time.

Specifically in 2025, we had 1795 clinicians ordered Decision DX melanoma for the very first time.

This was consistent with our experience in both 2024 and 2023, reflecting continued strong interest and adoption.

Additionally, total ordering clinicians over the lifetime of this test is nearing 17,000.

Our compelling body of evidence for Decision DX melanoma also continues to expand, with now 58 peer-reviewed publications supporting the clinical use of the test, which is not only a key driver for test adoption, but also meaningly differentiates our test from the competition.

We saw an approximately 31% patient penetration exiting 2025, and we believe Decision DX melanoma remains a durable ghost driver in 2026.

Turning to our gastroenterology franchise, Tissue cipher delivered 39,014 test reports in 2025 compared to 20,956 test reports in 2024, representing 86% growth and surpassing 80,000 tests ordered to date.

We believe this adoption reflects growing clinical recognition of tissue cipher's value in determining a patient's individual risk of progression from Barrett's esophagus to high grade dysplasia or esophageal cancer.

Barrett's esophagus is the only known risk factor for the development of oesophageal adenocarcinoma, one of the fastest growing cancers in the US.

Unfortunately, esophageal adenocarcinoma is also one of the most aggressive and difficult cancers to treat, with a 5-year survival rate of less than 20%.

In 2024, the American Gastrological Association or AGA released a clinical practice guideline for Barrett's esophagus, stating that it can be effectively treated with endoscopic procedures like ablation and noting that identifying high-risk patients is crucial.

Importantly, tissue cipher was highlighted as the first prognostic test capable of identifying patients with Barrett's esophagus at risk of progression to high grade dysplasia or esophageal cancer. We believe this recognition by the AGA reinforces tissue cipher's role in providing personalized and clinically validated risk stratification, which in turn assists clinicians and their patients in making better management decisions, with the end goal of extending the lives of high risk patients with interventions at the precancerous state.

The year ended December 30th, 2025. We had 2,082 new ordering clinicians for the tissue cipher test, up from 1,234 in 2024. We remain highly focused on education and building awareness to drive continued adoption.

With roughly 11% patient penetration for tissue cipher exiting 2025, an expanded commercial team, and the compelling clinical action ability with a high clinical need, we continue to believe tissue cipher is still in the early stages of a long runway for significant growth in 2026 and beyond.

Let's move on to the midterm phase of planned potential growth which we view as 2027 and 2028.

In addition to the continued contribution of our core revenue drivers, let's discuss our recently launched AdvanceAD-Tx test.

Advanced ADTX is our first in class test designed to guide systemic treatment selection for patients 12 years and older with moderate to severe atopic dermatitis. We clinically launched the test on a limited axis model in late November 2025.

The launch of Advanced AD significantly expanded our total addressable market and reinforced our commitment to the dermatology community.

Early results have exceeded our high expectations. As we announced in early January, we limited access to approximately 150 dermatological counts in the US.

Through year end, we were pleased to see that more than 50% of these initial counts had ordered one or more tests in the first five weeks of clinical availability.

As mentioned in our third quarter 2025 earnings call, our market research suggested a high level of clinical need and adoption. The results of the initial five weeks of clinical availability matched those expectations. In fact, through mid-February, we received close to 500 orders continuing to reinforce our expectations for adoption from our mid-2025 market research studies.

We expect to expand commission access in a phased manner based on a number of internal metrics. We expect revenue contribution from AdvanceAD to be immaterial in 2026, with material revenue contribution expected in 2027 or 2028.

Based upon revenue cycle timelines, we would expect to be in a position to communicate more about reimbursement in the second half of 2026.

Lastly, moving on to the next phase of our growth strategy, the longer-term, which we view as 2028 and beyond, touch on our pipeline initiatives and strategic investments.

Let's start with our GI pipeline. We acquired a non-endoscopic cell collection device with our acquisition of P Provise. We plan to use this collection device to gather samples for development of a pipeline test for differential diagnostic and screening support for GI diseases.

We expect to initiate and enroll our first patient for the development study in the second quarter of 2026.

This test will be upstream from tissue cipher, and we expect preliminary data before the end of 2026. This collection device requires FDA clearance, and we currently expect to file our submission and potentially receive clearance in 2026.

Next is our collaboration with Sybase where we will evaluate their electrical impedance spectroscopy or EIS technology for short.

We have US and select country rights to a number of possible indications. The first indication we are studying is the ability of the handheld EIS device or pen to predict flares in patients with atopic dermatitis. We believe there are at least two additional intended uses in the atopic dermatitis population alone, should we see promising results from initial flare prediction study.

Importantly, this approach could offer a nice synergy with our advanced AD test by extending the ability to support patients across different points in their disease journey.

We expect to initiate the EIS P/E study, and enroll our first patient for AD flares in the second quarter of 2026 and have preliminary development data before the end of 2026.

And to wrap up our near mid and long-term growth strategy, we continue to expect M&A to play a role with our strong balance sheet and history of successful execution in this area. We continue to evaluate cannabis that fit within our strategic opportunities criteria. That is number one, test near or at market.

Number 2, test near or at reimbursement. Number three, tests that can be promoted within sales teams the size of our current teams or less, that is around 100 or less. And four, test within or complementary to our current customer verticals as a priority.

In summary, we believe our financial strength positions as well to invest across our growth initiatives for continued value creation, and with that, I will now turn the call over to Frank.

Thank you, Derek. Good afternoon, everyone. As Derek noted, we delivered strong fourth quarter in 2025 financial results supported by discipline execution across the business. In the fourth quarter of 2025, we delivered total revenue of $87 million resulting in $344.2 million for the full year of 2025, exceeding our guidance range.

Full year 2025 outperformance was driven predominantly by our core revenue drivers including significant year over year test volume growth for tissue Cipher at 86%.

For 2026, we anticipate generating total revenue of $340 to $350 million. This is growth to mid to high 10s over 2025. If you exclude DecisionDx-SCC and ID Genetics revenue from our 2025 and 2026 totals, then we do not disclose revenue by test. Our revenue guide reflects continued growth in our core dermatologic and gastrointestinal franchises driven primarily by continued tissue cipher momentum. With immaterial revenue expected from our AdvancedAD-TX test and no revenue included for DecisionDx-SCC.

Our gross margin during the fourth quarter was 76.3% compared to 76.2% in the fourth quarter of 2024, and our gross margin for the full year of 2025 was 69.2% compared to 78.5% in 2024. Affecting 2025 gross margin was the loss of revenue from Precision DX FCC and the one-time adjustment of an acceleration of amortization expense of approximately $20.1 million during the three months ended March 31, 2025.

Our adjusted gross margin, which excludes the effects of intangible asset amortization related to our acquisitions and excludes the effects of revenue adjustments in the current period associated with test reports delivered in prior periods, was 77.6% for the quarter and 79.8% for the year compared to 81.1% and 82% for the same period in 2024.

Turning to expenses, our total operating expenses, including cost of sales for the quarter, were $90.8 million compared to $82.3 million for the prior year and we're $387 million for the full year 2025 compared to $323.4 million for 2024.

As Derek outlined, our growth plan spans the near, medium, and long-term. In support of that plan, we expect operating expenses to increase moderately in 2026 as we continue to support and invest in our core franchises, advance our pipeline, and support key reimbursement and commercial initiatives.

Sales and marketing expenses were $138.1 million for the full year compared to $123.5 million for 2024. The increase is primarily driven by increased personnel costs due to both expanded headcount and compensation adjustments, higher expenses associated with training events and speaker conferences, and higher sales-related travel expenses.

General and administrative expenses were $91.2 million for the full year compared to $76.6 million for 2024. The increase is primarily attributable to increased personnel costs for expanded headcount and compensation adjustments and higher information technology related costs.

Cost of sales expenses were $71 million for the full year compared to $60.2 million for 2024, primarily due to increased personnel costs from expanded hand count and compensation adjustments and higher expenses related to services, supplies, and depreciation.

R&D expenses were $51.9 million for the full year compared to $52 million for 2024, primarily due to increased personnel costs from expanded headcount and compensation adjustments offset by lower clinical studies costs.

Total non-cash stock-based compensation expense, which is allocated among cost of sales, R&D expense, and SG&A expense was $45.9 million for the full year, down from $50.3 million for 2024.

Interest income was $11.8 million for the full year 2025 compared to $12.9 million for 2024.

Our net loss for the fourth quarter of 2025 was $2.3 million compared to net income of $9.6 million for the fourth quarter of 2024, and our net loss for the full year 2025 was $24.2 million compared to net income of $18.2 million for 2024.

Diluted loss per share for the fourth quarter was $0.08 compared to diluted earnings per share of $0.32 in the fourth quarter of 2024. Diluted loss per share for the full year 2025 was $0.83, compared to diluted earnings per share of $0.62 for 2024.

Adjusted EBITDA for the fourth quarter was $11.5 million compared to $21.3 million for the comparable period in 2024. For the full year 2025, adjusted EBITDA was $44 million compared to $75 million in 2024.

Net cash provided by operating activities was $26.9 million for the fourth quarter of 2025 and $64.3 million for the full year.

Looking ahead, historically in the 1st quarter of the year we've seen net operating cash use due in part to annual cash bonus payments and certain healthcare benefit payments that do not recur during the remaining three quarters of the year.

Net cash used in investing activities was $60.4 million for the 12 months ended December 31, 2025 and consisted primarily of purchases of marketable investment securities of $188.7 million purchases of property and equipment. Our asset acquisition of pre-buys and purchases of debt securities classified as held to market, partially offset by the maturity of marketable investment securities.

Capital expenditures totaled $36 million in 2025. For 2025, we generated free cash flow defined as net cash provided by operating activities, less capital expenditures of $28.3 million. We expect capital expenditures to decline in 2026.

As of December 31, 2025, we had cash equivalents, and marketable securities of 299.5 million dollars.

In Closing, I'm pleased with our strong 2025 financial results which reflect our continued track record of disciplined execution and focus on driving long-term shareholder value. I'll now turn the call back over to Derek.

Thank you, Frank.

Before concluding, I want to share my sincere gratitude to each and every member of the castle team who continue to deliver meaningful impact for patients and clinicians every day. I am incredibly proud of our team and grateful for the culture that continued to build your castle.

In summary, we are executing on the drivers of our next phase of growth, supported by discipline, capital allocation, operational excellence, and relentless innovation, which we believe positions us well for long-term sustainable growth and value creation.

Thank you for your continued interest in Castle.

Now we were happy to take your questions, operator.

(Operator Instruction) Kyle Mikson, CANACCORD GENUITY

Hi, this is [Alex Bucason] on the line for Kyle Nixon.

Thank you for taking our questions and congratulations on a strong finish to 2025.

When last we spoke in early 2006, you noted you'd recently submitted new data to NCCN, recognizing that this GX melanoma is unique and that it's a GEP test that has demonstrated improved patient survival and GEP score provides meaningful prognostic information beyond traditional staging alone. Can you just concisely elaborate on your takeaway from the recent NCCN update? And what is your level of confidence that this is the melanoma could ultimately be included in guidelines, and what does that rank in terms of level of importance?

Thank you.

Other questions or I'll TRY and answer what I can here. I might miss something. So I think the most important element to think about is that the The US standard across all of the sort of organizations that put out guidelines or recommendations for considering to perform or to avoid a sentinel lithode biopsy surgical procedure has been 5% for several decades.

And that was not changed in this update either. So it remains that if a patient and a physician or a healthcare provider believes the chance of having a positive node is greater than 5%, then one should consider and discuss that or encourage a patient to undergo that procedure.

As you know or may know, our data regarding decision dex melanoma has shown time and time again in both prospective studies and retrospective studies that a low risk result from decision D ex melanoma gets you comfortably below 5%, indicating that a patient can have a conversation and hopefully avoid what's an unnecessary surgical procedure.

What the guidelines also showed with this update when they reviewed the Merlin 001 study is that the Merlin test fails to achieve this threshold of 5%, which we knew last year when it was published in September, October 2025. So the current guidelines would say there isn't a recommendation to consider is the XM, I want you to get to in just a minute.

There isn't an acknowledgment or recommendation that you that the skyline test actually gets below 5%, and in fact they also state that it acts similarly to nomograms which today can't get below 5% from a population basis set. So it's a little head scratching. Now to answer your question about the outcomes data such as our senior publication that was not included in the in the updated guidelines, I think we did a quick count. We have.

58 peer reviewed publications.

That review our test for both a Both predicting, the likelihood of a sentinel lymph node, biopsy outcome, being below 5% or greater than 5%, as well as, survival benefits. So we're talking about recurrence free survival, just aesthetic-free survival, not almost specific survival. We also have clinical use studies showing how doctors have safely used our test results in managing clinical care and as you noted, we also have data. From the National Cancer Institute where we matched people who received Decision DX melanoma as part of the clinical care with patients in the CR database who did not receive our test as part of their clinical care and found that when care is guided with the use of our test results, there is an association with improved survival, not just overall survival, but more importantly, melanoma survival. It's a bit of a head scratcher.

It turns out that of those 58 articles that have been published and easily found by doing a literature search, only 11 are cited in the current guidelines, meaning 47%, including the one you mentioned earlier, the NCICR database, were not reviewed by the NCCN committee. So that's a good head scratcher about why 47 studies were ignored when what they're looking for is apparently more published evidence to support the.

Use of our test.

Thank you. That was very helpful. And one last one from me. So one thing we haven't touched upon is the FDA submission for decision melanoma.

What is your timeline on when we could see FDA approval for this test and how will this help you impair discussions, effectively drive higher adoption, and potentially accelerate test volume growth for this test?

Thank you.

Yeah, that's a good question there. So we are preparing our submission as we speak now.

We believe that it will be accepted as a de novo 510k submission as opposed to PMA submission, and those timelines from the time of submission to time of clearance are pretty well prescripted by the FDA. So that that may be something which we would see towards the end of the year, maybe early next year, that's hard to say in terms of sort of impact on clinician updates since that was the last part of your question. I don't know if there's any evidence that we have seen where you take a Lab developed test and move it over to an IVD cleared device where you would see or expect a sort of substantial change in sort of volume uptake. There are certainly going to be clinicians out there, I think, who may be waiting for sort of an FDA flag of approval, so maybe I'm being a little too conservative there. I think the bigger impact and the reason why we are going forward on this is looking at the. At the newer state biomarker laws which among other things would indicate that across most of the states who have enacted biomarker laws, if you have an FDA cleared or approved device, then that qualifies for reimbursement or payment from commercial insurance carriers with a few other caveats there and so our primary drive to be H1st about looking to achieve. 510k clearance was to focus on leveraging state buyer market laws to reduce nonpayments from commercial insurance carriers. So that's the value that we would see. I think the quicker we can get that into the FDA and out of the FDA, will then have a subsequent impact, I think, on our overall commercial ASP.

Thank you very much.

(Operator Instruction) Subbu Nambi, Guggenheim Securities LLC. Please go ahead.

Hey guys, this is [Thomas on Puribu]. Thanks for taking our questions. Maybe one on ADTX. Our checks indicated a high level of awareness of the test already in the field and looks like from your prepared comments that's pretty consistent. Can you just speak a bit to the strategy of your sales team approaching derms with that test and what's led to the rapid KOL awareness?

Let's see, I'll TRY to answer that question. So, that's interesting. I would have, I wouldn't have guessed we had generated, that much awareness depending upon the panel you guys looked at. So that's quite positive, by the way, so thank you for that. We released the test as we talked about, I guess back in January maybe with a limited access launch, and I guess the last week of November, so kind of 5 weeks of Availability to roughly 150 accounts that were dermatological accounts. The majority of those were accounts that were early adopters of gene expression profile testing. So we, so we knew that they had a predilection towards adopting new technologies for patient care. There were also in there a few clinical sites that were not necessarily early adopters of gene suppression profile tests, and there were also a small number of KOLs that were not involved in our studies or don't treat skin cancer. And of those, I think we had noted in January that over half of them had ordered at least one or more tests in the first sort of 5 weeks and that's a pretty good uptake we thought relative to Thanksgiving being in there. Christmas and Hanukkah from a reduced office use standpoint, so that felt quite positive and through, I think mid February, maybe it was last week, I can't remember the exact date, we had received over 500 orders, from the accounts that we've allowed to have initial access to. So I think, I think we would concur that the interest is as high as we thought it would be relative to the market research that we completed last summer, and that continues to be the case here. As you look forward to the rest of 2026, we look at sort of what's the current split. So currently, we have our field force, which was 1100% bonused on Decision DX melanoma test results because that's the one that we have consistency of payment for. And there are some small, I guess you could call them kickers or extra bonus kickers, on some group or team-based atopic dermatitis, volume growth and test for volume of growth. But again, Given we have control of this with a limited access perspective, it will remain sort of, 100% melanoma focused with some atopic dermatitis sprinkled in. We'll probably shift that to a 90, 10% here in the second quarter going forward, but again, still trying to control axis so we can do two things. One of them is, or three things actually. One of them is to, maintain our focus and momentum on Decision DX melanoma. Two is to make sure that as we see volume expanding. That our clinical laboratory and the logistics program of having to sort of have kits available with our buffer preservation in doctors' offices at the right time when patients walk in continues to be a seamless process so that we don't have a frustration building up with our customer base in dermatology. And then third was, of course, making sure that we watch the sort of line of ASP. Growth and as we see our ASP growing along our models and we'll go ahead and release this to more and more customers. But I would concur with you if you're seeing a high level of awareness and enthusiasm among your physician panel that is what we're seeing too in terms of enthusiasm.

(Operator Instruction) Puneet Souda, Leerink Partners.

Hey folks, this is [Carlos San for Pani]. Thanks for taking the question. I've got two about tissue cipher.

The first one is if you could just give us an update on the sales reps and their activity, I think last we checked there were 65 reps, and then you got a couple more from Provi. Do you see yourself expanding the reps, more this year and just Generally how they're contributing to the growth of that account.

So we continue to add to the tissue cipher sales team, and we continue to do so over the course of the years we see territories reaching volume levels that we think is difficult to sort of maintain a balance between maintaining and growing, volume within existing customers as well as hunting for new customers. We think both dermatology and the GI, specialties.

Shouldn't require more than 100 sales reps and so as we sort of see volume come in we will sort of be marching in a methodical fashion towards trying to get below that number be higher than we were before. So that's kind of where we're sitting throughout the where we are now and I, and throughout the remainder of 2026 I think it was the com, right, yeah.

Okay, thank you. And one more on tissue cipher, so, you talked a bit last year about an opportunity to penetrate into private equity roll-ups, and it'll be helpful to get an update on whether that's something you're executing on that's been driving the, frankly, really incredible growth you've been seeing. Is that still an opportunity that can drive a step up of growth in the future, or is it something that, after some research, you decide to focus your efforts to in other areas?

Thank you.

Great question there. So one, As you look at volume in 2026, including fourth quarter volume.

I don't think you or we would be able to discern back the impact on sort of group practices or even P/E groups, adopting a sort of more formulatic approach to saying, hey, we want to go ahead and treat Erict's esophagus patients regardless of which GI is treating that patient in a parallel manner. So we have seen some success in some smaller groups that would suggest as we go through 2026 that we would be able to go ahead and tackle and accrue efficiency among larger groups. And so that may contribute to some volume expansion in 2026, but I think the volume expansion both year over year and quarter over quarter growth and tissue cipher in 2025 is largely based to just the organic need of individual clinicians seeing the value of this test clinically and deciding to go ahead and TRY it and then adopt it for their patient care.

God, that makes sense. I just sneak this in, so this isn't something though that you formally adopted the strategy or.

Is it a strategy that you've decided to not formally adopt?

Focusing on the.

I'm sorry if inadvertently ignored your question directly. There is interest in large group models, whether I want to call it P/E groups only or just larger practices of gastroenterologists to say, hey, we should be treating, [Errett's] esophagus disease uniformly for quality standards and good patient care as opposed to one-offs. And so that is a An important strategy that we have, across the gastroenterology sales force, our strategic accounts team to say, hey, how do we move practices from being individual clinicians or responsible individual patients to saying this is a test which has clearly shown it finds people at high risk for disease, progression, and we do know that if you go ahead and use interventional tools, be it ablation or ablation with surgical, techniques as well, that you can basically Remove that Barrett's esophagus disease and if you remove it does not progress to esophageal cancer. So we know we can cure or stop patients from progressing to cancer if we know who to intervene on and that's a very attractive commentary in terms of, why should the survival of me as a patient be any different than Frank Stokes because I see a different doctor than he does. So I think we will see. The success that we're beginning to go ahead and believe we will feel come to fruition in 2026. So it is definitely a strategy that we're looking to continue to, develop, I guess you would say.

All right, thanks, really appreciate it. It's a graphic recorder.

(Operator Instruction) Matthew Parisi, KeyBanc Capital Markets

Hi, yes, this is Matthew Prey on for Paul Knight at Key Bank Capital Markets. First off, congrats on the great quarter. So just a quick question to begin would be around, volumes for, melanoma. I know you guys do not provide volume guidance, but following two consecutive years of high single-digit volume growth for the melanoma test, would it be reasonable to assume continued high single-digit volume growth for 26?

Frank, do you want to handle that?

Yes.

Yeah, thanks for the question. I think we're going to see mid to high single-digits, volume growth in melanoma this year as well. We're in a very nice penetration, level there with, 32% maybe of the patients being tested now and we think, something over half the physicians, maybe even 60% of the targetable physicians or clinicians are using the test regularly so we'll continue to see that same level of growth we would expect this year.

Thank you. And then just one more would be, I'm not sure if I missed it earlier, but of the roughly 100 kind of salesforce team, could you give some insight into the split between Durham and GI and what would the kind of percent be?

Yeah, we do not disclose the number of reps in each sales force. What we said is that we think each sales force, can be well managed at fewer than 100 reps. So, we, I think back in, gosh, April of 25, we said that the tissue cipher sales force had been expanded to 64 and, I think we said last year also the dermatology sales force was in the 70s, so. We're still in those vicinities. We will make expansions as Derek highlighted earlier this year, to accommodate our continued growth, but we think we can run both sales forces under 100, for some time here.

Awesome, thanks so much.

(Operator Instruction) Catherine Schulte, Robert W. Baird & Co., Inc.

Hi guys, this is [Josh] on for Catherine.

Thank you for taking questions. And maybe first, could you share your expectations for tissue site for volume growth in 206? Do we expect this to come more from further penetration within your existing ordering base or adding new clinicians? And then where are you from a clinician penetration perspective?Thanks.

Yeah, I think last year we said for 24, go there.

You got Yeah, so I think for 24 we said we had something over 1,000 new ordering physicians in 24 and then for 25 something over 2000. So, those two data points together gets you to 3,000 clinicians, which is probably we think again similar to Durham, which is part of the appeal to the therapeutic area for us, but it looks like there's 12,000 to 14,000 targetable clinicians in the GI space so.

We're probably, 25%, 30% penetrated in the in the clinician or HCP level penetration and I think if you just take the the best numbers we have on a patient basis, we're about 11% penetrated. So clearly we continue to expect volume growth this year, probably something close nominally to the growth we saw just on a nominal test basis.

For 24 for 25 rather into 26, we are getting into the larger numbers, so the percent growth becomes the hurdle becomes a bit higher and you're into the later adopter positions, but yeah, we should see continued volume growth and maybe not quite the percentages we've seen in 24 and 25 just given where we are penetration wise, but continue to see strong growth from a volume perspective on tissue cipher for the year.

Great. And then I was also wondering if we should expect quarter over quarter declines for Decision DX Melanova volumes in one queue, and then how should we think about the cadence of year over year volume growth throughout 26, just given some of the tougher year over year comps in the back half. Thanks.

Yeah, it's what melanoma's got just very, it's very predictable seasonality, and what we see is Flattish sequential growth each quarter except Q1 to Q2 and it's driven, it's really driven primarily by physician encounters, physician-patient encounters, and, it's a little different than just business days, Q1, there are a number of, there are a couple of large Durham meetings that take place in Q1 that take physicians out of their practice so that reduces the patient encounters and we, we've talked before, 100 tests one way or the other is still flattish on a basis of 10,000+ tests. So, that, that's the pattern we've seen since 2021 coming out of COVID, we've seen that pattern very consistently and so you kind of have flattish sequential growth until you get Q1 to Q2. That tends to be your step up and then that new level or new stepped up level is durable through the next several quarters. So, we would expect the same flattish performance. You can, you can really look at the volumes we disclose each year back to 21 and see pretty predictably what volumes look like Q4 to Q1.

(Operator Instruction) Mason Carrico, Stephens Inc.

Hey guys, thanks for taking the questions here. Derek, could you give us your latest thoughts on the commercial strategy for the Durham team if we were to see a positive draft LCD get published mid-year for Decision DX SEC? I guess, how are you thinking about splitting reps time between melanoma, SEC and your AD test now if that were to play out?

Yeah, that'll be a very.

Nice problem to have, Mason won't it, so.

I think there are a couple of variable triggers there, right, so having a having the reconsideration request resulting in LCD which kind of covers it the way it was covered before by [Novatas], let's just assume that's the base case. I would say that we would begin to go ahead and fold SCC back into the sales bag from a commission standpoint, although we have to watch for timing. It may be up to a year before you would see, SEC gain reimbursement, but I think we talked about in previous years that if we. If we see limelight to regaining coverage, then the question will be, do you want the run rate for that test to be $25 million a year or do you want it to be $100 million a year? So there's some interesting trade-offs to go ahead and think through there. We think that it's probably difficult to have 33 tests being sold extremely well by the same person of the same customer base. And so if we're faced with that wonderful opportunity or problem, I guess depending on what you'd say, if we are seeing what we like in terms of the reimbursement growth for the advanced AD test, then we could, we could come around and say we can profitably maybe expand our sales forces to go ahead and make sure we can handle all three opportunities decision DX melanoma. Advanced AD and the and the regaining of coverage for the SCC. So I think we'll have to see kind of how those latter two things come out, the SCC draft timing, how confident we are about will that be finalized in 3 months or will it take a year, and then also our sort of our sort of climb and advanced AD for atopic dermatitis, and come to some decisions there. But otherwise that's been part of our planning about how we approach that and there's a few different variables there, but, it will represent a very nice opportunity for patient care and for the company overall.

Got it. That's helpful. And then, would you remind us when NCCN typically updates guidelines for SEC, and what new data I guess were you able to submit ahead of that panel meeting, that maybe previously wasn't submitted or previously wasn't reviewed, in last year's update.

Yeah, that's a good question. I might be off on the facts here, so I'll send that, say that caveat here.

I believe the submission that would have gone in last spring included our two papers for showing the benefit to predicting adjuvant radiation therapy responsiveness. Those papers are published, I think in mid 2024, the third quarter of 2024, so they missed the 2024 cutoffs. Those have been submitted last year. Their annual in-person meeting is usually around the most surgical meeting in May of each year, so. If they're kind of doing a one year cadence of updating guidelines, maybe that comes out between now and call it late April or May will be the timing I would expect to see.

Got it. That's

Helpful.

Thank you guys.

(Operator Instruction).

So this does conclude our fourth quarter and full year 2025 earnings recall. We do thank you again for joining us today and for your continued interest in Castle Biosciences Inc.

(Operator Instruction).