7 unchanged sentences
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term as defined in Exchange Act Rule 13a-15(f).
−Removed: Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive
−Removed: officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S.
+Added: Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S.
As of December 31, 2024, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework) .
Based on this assessment, our management concluded that, as of December 31, 2024, our internal control over financial reporting was effective based on those criteria.
−Removed: Our independent registered public accounting firm, KPMG LLP, has audited the effectiveness of our internal control over financial reporting as of December 31, 2023, as stated in its report contained in Item 15 of this Annual Report on Form 10-K.
+Added: Our independent registered public accounting firm, KPMG LLP, has audited the effectiveness of our internal control over financial reporting as of December 31, 2024, as stated in its attestation report contained in Item 15 of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
2 unchanged sentences
Securities Trading Plans of Directors and Executive Officers
−Removed: On November 5, 2023 , Frank Stokes , our Chief Financial Officer , adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 43,309 shares of our common stock.
+Added: On November 11, 2024 , Derek Maetzold , our Chief Executive Officer , adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 301,404 shares of our common stock, less the number of shares withheld to cover tax withholding obligations in connection with the vesting and settlement of outstanding RSUs and PSUs, and less any shares that are sold under his previous arrangement.
The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c).
−Removed: The duration of the trading arrangement will be from February 5, 2024 until the earlier of the completion of all transactions under the trading arrangement or the termination of the plan.
−Removed: On November 6, 2023 , Frank Stokes terminated a trading arrangement for the sale of the Company's common stock.
−Removed: Such trading arrangement was not intended to satisfy the affirmative defense conditions of Securities Exchange Act Rule 10b5-1(c), but complied with the then-applicable requirements of Rule 10b5-1(c) when adopted in May 11, 2023 .
−Removed: Such trading arrangement provided for the sale of up to 4,000 shares between August 15, 2023 and the completion of all the transactions under the trading arrangement.
−Removed: On December 5, 2023 , Derek Maetzold , our Chief Executive Officer , adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 228,103 shares of our common stock.
+Added: The duration of the trading arrangement will be from February 24, 2025 through August 13, 2025 .
+Added: On November 18, 2024 , Frank Stokes , our Chief Financial Officer , adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of up to 100% of the shares of our common stock issued upon the settlement of 14,617 outstanding RSUs, less the number of shares withheld to cover tax withholding obligations in connection with the vesting and settlement of such RSUs.
The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c).
−Removed: The duration of the trading arrangement will be from March 7, 2024 through September 6, 2024.
+Added: The duration of the trading arrangement will be from February 18, 2025 through December 31, 2026 or earlier if all transactions under the trading arrangement are completed.
No other officers or directors, as defined in Rule 16a-1(f), adopted and/or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as defined in Regulation S-K Item 408, during the last fiscal quarter.
9 unchanged sentences
• If required, the information regarding delinquent reports under Section 16(a) of the Exchange Act is to be included in the section entitled “Delinquent Section 16(a) Reports.”
−Removed: • The information relating to our insider trading policies is to be included in the section entitled “Clawback Policy.”
Such information is to be included in the Proxy Statement and is incorporated herein by reference.
+Added: The information required by Item 408(b) of Regulation S-K will be set forth in the section captioned “ Insider Trading Arrangements and Policies ” in our Proxy Statement and is incorporated herein by reference.
We have adopted a written Code of Business Conduct and Ethics (“Ethics Code”) that applies to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
2 unchanged sentences
Executive Compensation.
−Removed: The information required by this item is to be included in the Proxy Statement under the section entitled “Executive Compensation” and is incorporated herein by reference.
+Added: The information required by this item is to be included in the Proxy Statement under the section entitled “Executive Compensation” and is incorporated herein by reference, provided that the information required by Item 402(x) of Regulation S-K shall be set forth in the section headed “Policies and practices related to the grant of certain equity awards close in time to the release of material nonpublic information” in the Proxy Statement and is incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
1 unchanged sentence
Certain Relationships and Related Transactions, and Director Independence.
−Removed: The information required by this item is to be included in the Proxy Statement under the sections entitled “Transactions with Related Persons and Indemnifications—Related Person Transactions Policy and Procedures” and is incorporated herein by reference.
+Added: The information required by this item is to be included in the Proxy Statement under the section entitled “Transactions with Related Persons and Indemnifications—Related Person Transactions Policy and Procedures” and is incorporated herein by reference.
Principal Accountant Fees and Services.
−Removed: Our independent registered public accounting firm is KPMG LLP , Houston, TX , Audit Firm ID:
+Added: Our independent registered public accounting firm is KPMG LLP , Houston, TX , PCAOB ID:
The information required by this item is to be included in the Proxy Statement under the section entitled “Proposal 2:
12 unchanged sentences
and Fortis Advisors LLC, incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on April 4, 2022.
−Removed: 3.1 Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2019.
+Added: 3.1 Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.
+Added: 2 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2019.
3.2 Amended and Restated Bylaws of the Registrant, incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2019.
29 unchanged sentences
10.11+ Castle Biosciences, Inc.
−Removed: 2022 Inducement Plan , incorporated by reference to Exhibit 99.1 of th e Registrant ’ s Registration Statement on Form S- 8 ( File No .
−Removed: 333-275881 ) , f iled with the SEC on December 4, 2023 .
+Added: 2022 Inducement Plan, incorporated by reference to Exhibit 99.1 of the Registrant’s Registration Statement on Form S-8 (File No.
+Added: 333-275881), filed with the SEC on December 4, 2023.
10.12+ Forms of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under the Castle Biosciences, Inc.
2 unchanged sentences
2022 Inducement Plan, incorporated by reference to Exhibit 10.13 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 2023.
−Removed: 10.14+ Non-Employee Director Compensation Policy, as amended effective January 31, 2023 , incorporated by reference to Exhibit 10.14 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 2023.
+Added: 10.14+ Non-Employee Director Compensation Policy, as amended effective May 31, 2024 , incorporated by reference to Exhibit 10.
+Added: 1 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2024 .
10.15+ Amended and Restated Executive Employment Agreement, dated September 20, 2012, as amended, by and between the Registrant and Derek J.
6 unchanged sentences
10.19+ Castle Biosciences, Inc.
−Removed: Retirement Policy , incorporated by reference to Exhibit 10.
−Removed: 1 6 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 202 3 .
+Added: Retirement Policy, incorporated by reference to Exhibit 10.16 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 2023.
10.20+† Castle Biosciences, Inc.
−Removed: Severance and Change in Control Plan , incorporated by reference to Exhibit 10.
−Removed: 20 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 202 4 .
+Added: Severance and Change in Control Plan, incorporated by reference to Exhibit 10.20 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 2024.
+Added: 10.21+ Amended Participation Agreement, dated April 1, 2024, by and between the Company and Tobin Juvenal, incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 2, 2024.
+Added: 10.22+ Amended Participation Agreement, dated April 1, 2024, by and between the Company and Kristen Oelschlager, incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 2, 2024.
+Added: 10.23+ Amended Participation Agreement, dated April 2, 2024, by and between the Company and Derek Maetzold, incorporated by reference to Exhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 2, 2024.
+Added: 10.24+ Amended Participation Agreement, dated April 2, 2024, by and between the Company and Frank Stokes, incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 2, 2024.
10.25 Standard Office Lease, dated as of October 5, 2015, by and between the Registrant and Merced Restart Phoenix Investors II, LLC, incorporated by reference to Exhibit 10.14 of the Registrant’s Registration Statement on Form S-1 (File No.
333-232369), as amended, originally filed with the SEC on June 26, 2019.
+Added: Exhibit Number Description of document
10.26 First Amendment to Lease, dated December 4, 2018, by and between the Registrant and Alturas Siete I, LLC, incorporated by reference to Exhibit 10.15 of the Registrant's Annual Report on Form 10-K, filed with the SEC on March 10, 2020.
2 unchanged sentences
10.29† Fourth Amendment to Standard Office Lease, dated March 11, 2022, by and between the Registrant and Alturas Siete I, LLC, incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on March 17, 2022.
−Removed: Exhibit Number Description of document
10.30† Fifth Amendment to Standard Office Lease, dated October 24, 2022, by and between the Registrant and Alturas Siete I, LLC, incorporated by reference to Exhibit 10.25 of the Registrant’s Current Report on Form 10-K filed with the SEC on February 28, 2023.
2 unchanged sentences
10.33 Second Amendment to Standard Office Lease, dated November 29, 2021, by and between the Company and Alturas Siete, II, LLC, incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 3, 2021.
−Removed: 10.30 Third Amendment to Standard Office Lease, dated February 9, 2023, by and between the Registrant and Alturas Siete, II, LLC , incorporated by reference to Exhibit 10.
−Removed: 29 of the Registrant’s Annual Report on Form 10- K f ile d with the SEC on February 28 , 2023 .
−Removed: 10.31 Fourth Amendment to Standard Office Lease, dated April 18, 2023 by and between the Registrant and Alturas Siete II, LLC, incorporated by reference to Exhibit 10.4 of the Registrant ’ s Quarterly Report on Form 10-Q f ile d with the SEC on May 10 2023 .
+Added: 10.34 Third Amendment to Standard Office Lease, dated February 9, 2023, by and between the Registrant and Alturas Siete, II, LLC, incorporated by reference to Exhibit 10.29 of the Registrant’s Annual Report on Form 10-K filed with the SEC on February 28, 2023.
+Added: 10.35 Fourth Amendment to Standard Office Lease, dated April 18, 2023 by and between the Registrant and Alturas Siete II, LLC, incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 10 2023.
10.36 Commercial Lease, dated December 17, 2019, by and between the Registrant and Tannos Land Holding III, LLC, incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2019.
2 unchanged sentences
10.39† Lease Agreement, dated April 1, 2022, by and between the Registrant and ACA Concourse East Unit 3 LLC, incorporated by reference to Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q filed with the SEC on May 9, 2022.
+Added: 10.40#† First Amendment to Lease Agreement, dated March 26, 2024 by and between the Registrant and ACA Concourse East Unit 3 LLC, incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 2, 2024.
+Added: 10.41 Confirmation of Amendment Provisions, dated as of August 8, 2024, to the Lease Agreement, dated April 1, 2022, by and between the Registrant and ACA Concourse East Unit 3 LLC, incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 4, 2024.
10.42 Purchase Sale Agreement of Land, dated Jul 10, 2023, by and between the Registrant and Hal B.
Boone, incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2023.
−Removed: 10.37 First Amend ment to Purchase Sale Agreement of Land, dated October 4, 2023, by and between the Registrant and Hal B.
+Added: 10.43 First Amendment to Purchase Sale Agreement of Land, dated October 4, 2023, by and between the Registrant and Hal B.
Boone, incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2023.
+Added: Exhibit Number Description of document
10.44† Second Amendment to Purchase Sale Agreement of Land, dated January 9, 2024, by and between the Registrant and Hal B.
+Added: Boone, incorporated by reference to Exhibit 10.38 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 2024.
10.45# Exclusive License Agreement, dated as of November 14, 2009, by and between the Registrant and The Washington University, incorporated by reference to Exhibit 10.17 of the Registrant’s Registration Statement on Form S-1 (File No.
333-232369), as amended, originally filed with the SEC on June 26, 2019.
+Added: 10.46# Loan and Security Agreement, dated March 26, 2024, by and among the Registrant and Silicon Valley Bank, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on March 27, 2024.
+Added: 19.1* Insider Trading Policy
21.1* Subsidiaries of the Registrant.
5 unchanged sentences
97.1+ Castle Biosciences, Inc.
−Removed: Incentive Compensation Recoupment Policy .
+Added: Incentive Compensation Recoupment Policy, incorporated by reference to Exhibit 97.1 of the Registrant's Annual Report on Form 10-K filed with the SEC on February 28, 2024.
101.INS* Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document.
1 unchanged sentence
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase.
−Removed: Exhibit Number Description of document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase.
25 unchanged sentences
Bradbury Chairperson of the Board of Directors February 27, 2025
−Removed: Aspinall Member of the Board of Directors February 28, 2024
/s/ Kimberlee S.
3 unchanged sentences
Bradley Cole)
+Added: /s/ Rodney Cotton Member of the Board of Directors February 27, 2025
+Added: (Rodney Cotton)
/s/ Ellen Goldberg Member of the Board of Directors February 27, 2025
7 unchanged sentences
Consolidated Statements of Operations for the Years Ended December 31, 202 4, 2023, and 2022
−Removed: Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 202 3 and 2022
+Added: Consolidated Statements of Comprehensive Income ( Loss ) for the Years Ended December 31, 2024, 2023 , and 2022
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024, 202 3, and 2022
6 unchanged sentences
We have audited the accompanying consolidated balance sheets of Castle Biosciences, Inc.
−Removed: and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).
+Added: and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).
We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with U.S.
+Added: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S.
generally accepted accounting principles.
61 unchanged sentences
Operating lease liabilities 1,665 1,137
+Added: Current portion of long-term debt 278 —
Other accrued and current liabilities 7,993 7,317
Total current liabilities 49,392 47,667
+Added: Long-term debt 9,745 —
Noncurrent operating lease liabilities 14,345 14,173
+Added: Noncurrent finance lease liabilities 311 25
Deferred tax liability 1,607 206
−Removed: Other liabilities 25 90
Total liabilities 75,400 62,071
9 unchanged sentences
Accumulated deficit ( 200,126 ) ( 218,371 )
−Removed: Accumulated other comprehensive income (loss) 136 ( 381 )
+Added: Accumulated other comprehensive income 230 136
Total stockholders’ equity 455,835 391,269
5 unchanged sentences
Years Ended December 31,
+Added: 2024 2023 2022
NET REVENUES $ 332,069 $ 219,788 $ 137,039
6 unchanged sentences
Total operating expenses, net 323,399 287,765 209,894
−Removed: Operating loss ( 67,977 ) ( 72,855 )
−Removed: Interest and other non-operating income 10,623 3,968
+Added: Operating income (loss) 8,670 ( 67,977 ) ( 72,855 )
+Added: Interest income 12,916 10,623 3,968
+Added: Changes in fair value of trading securities 555 — —
Interest expense ( 577 ) ( 11 ) ( 17 )
−Removed: Loss before income taxes ( 57,365 ) ( 68,904 )
+Added: Income (loss) before income taxes 21,564 ( 57,365 ) ( 68,904 )
Income tax expense (benefit) 3,319 101 ( 1,766 )
−Removed: Net loss $ ( 57,466 ) $ ( 67,138 )
−Removed: Loss per share, basic and diluted $ ( 2.14 ) $ ( 2.58 )
−Removed: Weighted-average shares outstanding, basic and diluted 26,802 26,054
+Added: Net income (loss) $ 18,245 $ ( 57,466 ) $ ( 67,138 )
+Added: Earnings (loss) per share:
+Added: Basic $ 0.66 $ ( 2.14 ) $ ( 2.58 )
+Added: Diluted $ 0.62 $ ( 2.14 ) $ ( 2.58 )
+Added: Weighted-average shares outstanding:
+Added: Basic 27,776 26,802 26,054
+Added: Diluted 29,255 26,802 26,054
The accompanying notes are an integral part of these consolidated financial statements.
CASTLE BIOSCIENCES, INC.
−Removed: CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
+Added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
−Removed: Net loss $ ( 57,466 ) $ ( 67,138 )
−Removed: Other comprehensive loss:
−Removed: Net unrealized gain (loss) on available-for-sale securities 517 ( 381 )
−Removed: Comprehensive loss $ ( 56,949 ) $ ( 67,519 )
+Added: Years Ended December 31,
+Added: 2024 2023 2022
+Added: Net income (loss) $ 18,245 $ ( 57,466 ) $ ( 67,138 )
+Added: Other comprehensive income (loss):
+Added: Net unrealized gain (loss) on debt securities held as available-for-sale 94 517 ( 381 )
+Added: Comprehensive income (loss) $ 18,339 $ ( 56,949 ) $ ( 67,519 )
The accompanying notes are an integral part of these consolidated financial statements.
2 unchanged sentences
(in thousands, except share data)
−Removed: Preferred Stock Common Stock Additional
+Added: Common Stock Additional
Capital Accumulated
2 unchanged sentences
Stockholders’
−Removed: Shares Amount Shares Amount
+Added: Shares Amount
BALANCE, JANUARY 1, 2022
17 unchanged sentences
27,410,532 $ 27 $ 609,477 $ ( 218,371 ) $ 136 $ 391,269
+Added: Stock-based compensation expense — — 50,320 — — 50,320
+Added: Exercise of common stock options 135,875 — 2,017 — — 2,017
+Added: Issuance of common stock from vested restricted stock units, performance stock units and payment of employees’ taxes 769,100 — ( 8,762 ) — — ( 8,762 )
+Added: Issuance of common stock under the employee stock purchase plan 167,688 1 2,651 — — 2,652
+Added: Net unrealized gain on marketable investment securities — — — — 94 94
+Added: Net income — — — 18,245 — 18,245
+Added: BALANCE, DECEMBER 31, 2024
+Added: 28,483,195 $ 28 $ 655,703 $ ( 200,126 ) $ 230 $ 455,835
The accompanying notes are an integral part of these consolidated financial statements.
3 unchanged sentences
Years Ended December 31,
+Added: 2024 2023 2022
OPERATING ACTIVITIES
−Removed: Net loss $ ( 57,466 ) $ ( 67,138 )
−Removed: Adjustments to reconcile net loss to net cash used in operating activities:
+Added: Net income (loss) $ 18,245 $ ( 57,466 ) $ ( 67,138 )
+Added: Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 15,997 12,330 10,543
1 unchanged sentence
Change in fair value of contingent consideration — — ( 18,287 )
+Added: Change in fair value of trading securities ( 555 ) — —
Deferred income taxes 1,401 ( 223 ) ( 1,877 )
11 unchanged sentences
Other accrued and current liabilities 320 2,139 ( 963 )
−Removed: Net cash used in operating activities ( 5,626 ) ( 41,655 )
+Added: Net cash provided by (used in) operating activities 64,866 ( 5,626 ) ( 41,655 )
INVESTING ACTIVITIES
−Removed: Purchases of property and equipment ( 13,621 ) ( 5,632 )
−Removed: Asset acquisitions, net of cash and cash equivalents acquired — 547
−Removed: Acquisition of business, net of cash and cash equivalents acquired — ( 26,966 )
−Removed: Proceeds from sale of property and equipment 13 195
Purchases of marketable investment securities ( 205,729 ) ( 189,075 ) ( 134,689 )
Proceeds from maturities of marketable investment securities 183,900 186,500 —
+Added: Purchases of property and equipment ( 28,326 ) ( 13,621 ) ( 5,632 )
+Added: Proceeds from sale of property and equipment 18 13 195
+Added: Acquisition of business, net of cash and cash equivalents acquired — — ( 26,966 )
+Added: Asset acquisitions, net of cash and cash equivalents acquired — — 547
Net cash used in investing activities ( 50,137 ) ( 16,183 ) ( 166,545 )
4 unchanged sentences
Repayment of principal portion of finance lease liabilities ( 97 ) ( 142 ) ( 122 )
−Removed: Net cash (used in) provided by financing activities ( 2,298 ) 1,515
−Removed: Net changes in cash and cash equivalents ( 24,107 ) ( 206,685 )
−Removed: Beginning of year 122,948 329,633
−Removed: End of year $ 98,841 $ 122,948
+Added: Proceeds from issuance of term debt 10,000 — —
+Added: Net cash provided by (used in) financing activities 6,139 ( 2,298 ) 1,515
The accompanying notes are an integral part of these consolidated financial statements.
3 unchanged sentences
Years Ended December 31,
+Added: 2024 2023 2022
+Added: NET CHANGE IN CASH AND CASH EQUIVALENTS 20,868 ( 24,107 ) ( 206,685 )
+Added: Beginning of year 98,841 122,948 329,633
+Added: End of year $ 119,709 $ 98,841 $ 122,948
SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR:
3 unchanged sentences
Accrued purchases of property and equipment $ 2,231 $ 1,226 $ 1,396
−Removed: Common stock issued in acquisition of business $ — $ 17,111
−Removed: Operating lease assets obtained in exchange for lease obligations $ 1,547 $ 6,075
Property and equipment acquired with tenant improvement allowance $ 1,389 $ 1,281 $ 51
+Added: Operating lease assets obtained in exchange for lease obligations $ 607 $ 1,547 $ 6,075
+Added: Decrease in operating lease assets with corresponding change in lease liabilities $ ( 7 ) $ — $ —
+Added: Finance lease assets obtained in exchange for lease obligations $ 218 $ — $ —
+Added: Common stock issued in acquisition of business $ — $ — $ 17,111
The accompanying notes are an integral part of these consolidated financial statements.
8 unchanged sentences
Basis of Presentation
−Removed: Our consolidated financial statements include the accounts of Castle Biosciences, Inc.
+Added: The consolidated financial statements include the accounts of Castle Biosciences, Inc.
and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S.
17 unchanged sentences
Actual results could differ from those estimates and assumptions.
−Removed: Operating Segments
−Removed: Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance.
−Removed: The Company views its operations and manages
+Added: Segment Reporting
+Added: Operating segments are components of an enterprise engaging in business activities from which it may recognize revenues and incur expenses, where discrete financial information is available, and where its operating results are regularly reviewed by the public entity's chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and to assess its performance.
+Added: A CODM may be an individual or a
CASTLE BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: its business as one operating segment.
−Removed: All revenues are attributable to U.S.-based operations and all assets are held in the United States.
+Added: decision-making group.
+Added: A reportable segment consists of one or more operating segments.
+Added: For additional information on our segment reporting, see Note 17.
Cash and Cash Equivalents including Concentrations of Credit Risk
5 unchanged sentences
Marketable Investment Securities
+Added: Our marketable investment securities are comprised of debt and equity securities.
All debt securities are recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, Investments-Debt Securities (“ASC 320”).
−Removed: Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date.
−Removed: All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320.
−Removed: We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive income (loss) within total stockholders’ equity, net of any related deferred income tax effects, on our consolidated balance sheets.
−Removed: Premiums or discounts from par value are amortized to interest income over the life of the underlying investment.
−Removed: Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in interest income in the consolidated statements of operations.
−Removed: Impairments of available-for-sale debt securities, if any, are recorded in consolidated statements of operations.
+Added: Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such determination at each balance sheet date.
+Added: All debt securities are classified as available-for-sale (“AFS”) and are recorded at fair value in accordance with ASC 320.
+Added: We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive income (loss) within total stockholders’ equity, net of any related deferred income tax effects, on the consolidated balance sheets.
+Added: Premiums or discounts from par value are amortized over the life of the underlying investment and are included in interest income in the consolidated statements of operations.
+Added: Realized gains and losses on available-for-sale securities, if any, are calculated at the individual security level and are included in interest income in the consolidated statements of operations.
+Added: Impairments of available-for-sale debt securities, if any, are recorded in the consolidated statements of operations.
+Added: Our equity securities consist of investments in shares of common stock which are listed and traded on the Nasdaq Global Market.
+Added: All trading securities are recognized in accordance with ASC Topic 321, Investments-Equity Securities and reported at their readily determinable fair values as quoted by market exchanges where changes in fair value are included in changes in fair value of trading securities in the consolidated statements of operations.
+Added: All changes in a marketable security’s fair value are reported in earnings as they occur, as such, the sale of our trading securities does not necessarily give rise to a significant gain or loss.
+Added: Investments in equity securities are classified as either current or long-term depending upon management’s intentions.
See Notes 5 and 12 for further details.
15 unchanged sentences
Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We carry inventories of test supplies in our laboratory facilities.
2 unchanged sentences
Property and equipment are stated at cost less accumulated depreciation and amortization.
−Removed: Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between five and
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between five and ten years .
Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the term of the lease.
1 unchanged sentence
Maintenance and repairs are charged to expense as incurred, and material improvements are capitalized.
+Added: Interest costs incurred during the construction of major capital projects are capitalized until the underlying asset is ready for its intended use, at which point the capitalized interest costs are amortized using the straight-line method over the estimated useful life of the underlying asset.
When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.
2 unchanged sentences
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination.
−Removed: In accordance with ASC Topic 350, Intangibles—Goodwill and Other , our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired.
−Removed: We perform annual impairment reviews of our goodwill balance during the fourth quarter of each fiscal year.
−Removed: We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test.
−Removed: If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No.
−Removed: 2017-04, Intangibles—Goodwill and Other (Topic 350):
−Removed: Simplifying the Test for Goodwill Impairment , by comparing the fair value of the reporting unit to its carrying value, including the goodwill.
−Removed: If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit.
−Removed: We did not incur any goodwill impairment losses in any of the periods presented.
−Removed: On June 2, 2023, a Medicare administrative contractor (“MAC”) finalized a local coverage determination (“LCD”) pursuant to which the DecisionDx-SCC test would no longer be covered by Medicare effective July 17, 2023.
−Removed: On June 5, 2023, our stock price decreased significantly and did not recover before June 30, 2023.
−Removed: In response to this trigger, we tested goodwill for impairment at June 30, 2023.
−Removed: We elected to bypass the optional qualitative assessment and proceeded directly to the quantitative assessment.
−Removed: In conducting our interim test, we concluded that our business consists of a single reporting unit.
−Removed: To measure the fair value of our reporting unit, we used a market approach whereby we calculated our total market capitalization on the impairment test date, based on the closing price of our common stock as reported on the Nasdaq Global Market, and applied a reasonable control premium.
−Removed: The control premium was based on an analysis of control premiums paid in recent acquisitions of companies in the same or similar industry as us.
−Removed: Our impairment test indicated that the fair value of our reporting unit exceeded its carrying value by 13 % and therefore no impairment was indicated.
−Removed: In July 2023, the MAC suspended the LCD and then posted a new draft LCD for comment that is substantially the same as the LCD that was to become effective.
−Removed: On October 1, 2023, we performed our annual impairment test which indicated that the fair value of our reporting unit exceeded its carrying value by 34 % and therefore no impairment was indicated.
−Removed: We continued to monitor for additional indicators of impairment through December 31, 2023 and did not observe any factors that could result in an impairment of goodwill.
+Added: Goodwill is not amortized, but is tested for impairment.
+Added: We test goodwill for impairment in the fourth quarter of each fiscal year and when events, or changes in circumstances, indicate that it may be impaired.
+Added: Events and changes in circumstances indicating that goodwill may be impaired include sustained declines in the price of our common stock, increased competition, changes in macroeconomic developments, unfavorable government or regulatory developments and changes in coverage or reimbursement conditions.
+Added: Goodwill is tested for impairment at the reporting until level where goodwill is held.
+Added: Testing begins with completion of an optional qualitative assessment.
+Added: If the qualitative assessment suggests that impairment is more likely than not, quantitative testing is conducted.
+Added: If the qualitative assessment is bypassed, we proceed directly to quantitative testing.
+Added: Quantitative testing consists of comparing the carrying value of goodwill to its estimated fair value.
+Added: Impairment of goodwill is the condition that exists when the carrying value exceeds its fair value.
+Added: Amounts by which carrying value exceed fair value, up to the total amount of goodwill allocated to the reporting unit, are recognized as an impairment loss in the consolidated statements of operations.
Long-Lived Assets
2 unchanged sentences
Impairment, if any, would be calculated based on the excess of the carrying amount of the long-lived asset over the long-lived asset’s fair value.
−Removed: There were no impairment charges recognized for the years ended December 31, 2023 and 2022.
+Added: There were no impairment charges recognized during the years ended December 31, 2024, 2023 and 2022.
We assess acquisitions under ASC Topic 805, Business Combinations (“ASC 805”) , to determine whether a transaction represents the acquisition of assets or a business combination.
1 unchanged sentence
The first step involves a screening test where we evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar assets.
−Removed: If the screening test is met,
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: we account for the set as an asset acquisition.
+Added: If the screening test is met, we account for the set as an asset acquisition.
If the screening test is not met, we apply the second step of the model to determine if the set meets the definition of a business based on the guidance in ASC 805.
2 unchanged sentences
Asset acquisitions are accounted for by allocating the cost of the acquisition, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis without recognition of goodwill.
−Removed: Business combinations are accounted for using the acquisition method.
+Added: Business combinations
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: are accounted for using the acquisition method.
Under the acquisition method, goodwill is measured as a residual amount equal to the fair value of the consideration transferred less the net recognized fair value of the identifiable assets acquired and the liabilities assumed, as of the acquisition date, and transaction costs are expensed as incurred.
6 unchanged sentences
In accordance with ASC 480, we record the contingent consideration initially and subsequently at fair value with changes in fair value recorded in the statements of operations each period.
−Removed: Contingent consideration is classified as current or noncurrent in our consolidated balance sheets based on the contractual timing of future settlement.
+Added: Contingent consideration is classified as current or noncurrent in the consolidated balance sheets based on the contractual timing of future settlement.
For additional information on the contingent consideration, see Notes 6 and 12.
−Removed: Effective January 1, 2021, we account for leases in accordance with ASC Topic 842, Leases (“ ASC 842”) .
+Added: We account for leases in accordance with ASC Topic 842, Leases (“ ASC 842”) .
We categorize leases at their commencement as either operating or finance leases based on the criteria in ASC 842.
11 unchanged sentences
R&D costs include, but are not limited to, payroll and personnel-related expenses, stock-based compensation expense, materials, laboratory supplies, and consulting costs.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Selling, General and Administrative Expenses
2 unchanged sentences
We expense all SG&A costs as incurred.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accrued Compensation
3 unchanged sentences
We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets.
−Removed: As of December 31, 2023 and 2022, we accrued approximately $ 21,706,000 and $ 18,209,000 , respectively, for liabilities associated with these bonus plans.
+Added: As of December 31, 2024 and 2023, we accrued approximately $ 23.3 million and $ 21.7 million, respectively, for liabilities associated with these bonus plans.
These amounts are classified as current or noncurrent accrued liabilities in the balance sheets based on the expected timing of payment.
2 unchanged sentences
The Plan is funded by employee contributions and provides for discretionary contributions in the form of matching and/or profit-sharing contributions.
−Removed: For the years ended December 31, 2023 and 2022, we provided a discretionary matching contribution of $ 4,620,000 and $ 3,525,000 , respectively.
−Removed: The higher amount for the year ended December 31, 2023 primarily reflects an increase in the number of employees compared to the year ended December 31, 2022.
−Removed: We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
−Removed: Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
−Removed: The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the statutory enactment date.
−Removed: Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
+Added: For the years ended December 31, 2024, 2023, and 2022 we provided a discretionary matching contribution of $ 5.5 million, $ 4.6 million, and $ 3.5 million respectively.
+Added: The higher amount for the year ended December 31, 2024 primarily reflects an increase in the number of employees compared to the years ended December 31, 2023 and 2022.
+Added: We use the asset and liability method of accounting for income taxes.
+Added: Current income taxes are recognized for the estimated taxes payable or refundable on tax returns for the current year.
+Added: Deferred income taxes arise from the recognition of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities.
+Added: We consider all evidence, both positive and negative, with respect to our net operating loss (“NOL”) carryforwards, expected levels of pre-tax financial statement income (loss), taxable income (benefit), liquidity, and prudent and reasonable tax planning strategies when evaluating whether the temporary differences will be realized.
+Added: In projecting future taxable income (loss), we begin with budgeted pre-tax income (loss) adjusted for estimated taxable and non-taxable items.
+Added: The assumptions about future taxable income (loss) require significant judgment and are consistent with the plans and estimates we use to manage our businesses.
+Added: A valuation allowance is established when it is more likely than not that some portion of the deferred tax asset will not be realized.
+Added: The evaluation of a valuation allowance considers the character of the taxable income, ordinary income versus capital income.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.
1 unchanged sentence
A liability for unrecognized tax benefits is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.
+Added: The effect of a change in tax rates is recognized in the period of enactment.
+Added: If we were to be levied interest and penalties by the Internal Revenue Service, these amounts would be recognized as a component of income tax expense in the consolidated statement of operations.
Our policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of tax expense.
−Removed: No material amounts of tax-related interest or penalties were recorded during the years ended December 31, 2023 and 2022.
Stock-Based Compensation
−Removed: Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards.
−Removed: The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model.
+Added: Stock-based compensation expense for equity instruments is measured based on the grant-date fair value of the awards.
+Added: For stock option awards, and purchase rights made under the 2019 Employee Stock Purchase Plan (the “ESPP”), the fair value is estimated on the date of grant using the Black-Scholes option-pricing valuation model.
For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant.
For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards.
−Removed: For options and RSUs, the requisite service period is generally the award’s vesting period (typically four years ).
+Added: For stock options and RSUs, the requisite service period is generally the award’s vesting period (typically four years ).
PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period.
2 unchanged sentences
The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award.
+Added: Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements.
+Added: Share-based awards falling into the scope of the 2023 Retirement Policy are accounted
CASTLE BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements.
−Removed: In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting date.
+Added: for as a modification of existing awards under ASC Topic 718, Compensation – Stock Compensation.
+Added: The modifications do not result in recognition of incremental compensation cost however, do result in a new estimate of the requisite service period, which we reassess at each balance sheet date.
For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date.
Forfeitures are accounted for as they occur.
−Removed: Comprehensive Loss
−Removed: Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.
−Removed: Comprehensive loss is made up of net loss plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss).
+Added: Comprehensive Income (Loss)
+Added: Comprehensive income (loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.
+Added: Comprehensive income (loss) is made up of net loss plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss).
CARES Act Payroll Tax Deferral
2 unchanged sentences
We began deferring payment of the employer share of social security taxes in May 2020.
−Removed: Of the $ 551,000 originally deferred, 50% was repaid during the year ended December 31, 2021 and the remaining $ 276,000 of such taxes were repaid during the year ended December 31, 2022.
+Added: Of the $ 0.6 million originally deferred, 50% was repaid during the year ended December 31, 2021 and the remaining $ 0.3 million of such taxes were repaid during the year ended December 31, 2022.
+Added: Recently Adopted Accounting Pronouncements
+Added: In November 2023, the FASB issued ASU No.
+Added: 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.
+Added: The guidance was effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
+Added: Early adoption was permitted.
+Added: The guidance was applied retrospectively to all periods presented in the financial statements, unless it was impracticable.
+Added: We have adopted the guidance under this ASU 2023-07 on a retrospective basis with an effective date January 1, 2022.
+Added: For additional information on our segment reporting, see Note 17.
Accounting Pronouncements Yet to be Adopted
4 unchanged sentences
Early adoption is permitted.
−Removed: We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures.
+Added: We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU No.
−Removed: 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.
−Removed: The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
+Added: 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40)—Expense Disaggregation Disclosures:
+Added: Disaggregation of Income Statement Expenses (“ASU 2024-03”), which specifies additional disclosure requirements.
+Added: The amendments in ASU 2024-03 require disclosure about the composition of certain income expense line items, such as purchases of inventory, employee compensation, and other expenses, as well as disclosure about selling expenses.
+Added: The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027.
Early adoption is permitted.
−Removed: The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable.
−Removed: We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures.
−Removed: W e have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on our consolidated financial statements or disclosures upon adoption.
+Added: We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.
+Added: W e have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on the consolidated financial statements or disclosures upon adoption.
All of our revenues from contracts with customers are associated with the provision of testing services.
−Removed: Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma.
−Removed: We also provide a test for patients with cutaneous squamous cell carcinoma (“SCC”), DecisionDx®-SCC, a test for use in patients with suspicious pigmented lesions, MyPath® Melanoma and DiffDx®-Melanoma, a test for uveal melanoma (“UM”), DecisionDx®-UM and a test for patients diagnosed with Barrett’s esophagus (“BE”), the TissueCypher® test.
+Added: Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma and our DecisionDx®-SCC test for cutaneous squamous cell carcinoma (“SCC”).
+Added: We also provide a test for patients diagnosed with Barrett’s esophagus (“BE”), the TissueCypher® test, a test for patients with suspicious pigmented
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: lesions, MyPath® Melanoma and DiffDx®-Melanoma, and a test for uveal melanoma (“UM”), DecisionDx®-UM.
We also began offering a pharmacogenomics (“PGx”) testing service focused on mental health, IDgenetix®, following a business combination completed in April 2022.
5 unchanged sentences
In addition, patients do not enter into direct agreements with us that commit them to pay any portion of the cost of the tests in the event that their insurance provider declines to reimburse us.
−Removed: We may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan.
+Added: We may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan.
These situations may result in a delay in the collection of payments.
10 unchanged sentences
Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues.
−Removed: Included in revenues for the years ended December 31, 2023 and 2022 were $ 4,476,000 of net negative revenue adjustments and $ 1,987,000 of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.
+Added: Included in revenues for the years ended December 31, 2024, 2023, and 2022 were $ 1.8 million of net negative revenue adjustments, $ 4.5 million of net negative revenue adjustments, and $ 2.0 million of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.
These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration.
Because our contracts with customers have an expected duration of one year or less, we have elected the practical expedient in ASC 606 to not disclose information about our remaining performance obligations.
−Removed: Any incremental costs to obtain contracts are recorded as selling, general and administrative expenses as incurred due to the short duration of our contracts.
+Added: Any incremental costs to obtain contracts are recorded as SG&A expenses as incurred due to the short duration of our contracts.
Contract balances consisted solely of accounts receivable (both current and noncurrent) as of December 31, 2024 and 2023.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Disaggregation of Revenues
1 unchanged sentence
Years Ended December 31,
+Added: 2024 2023 2022
Dermatologic (1)
5 unchanged sentences
(2) Consists of TissueCypher, DecisionDx-UM and IDgenetix.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: We have presented disaggregated net revenues included in our single reportable segment in the table above.
+Added: The characteristics for each test in our single segment are similar, with each test having a single performance obligation.
+Added: Our CODM is the single individual responsible for managing our segment and reviews consolidated results and budgets in assessing performance and in allocated resources.
+Added: See Note 17 for additional information about our reportable segment.
Payor Concentration
We rely upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of our tests.
−Removed: Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows:
+Added: Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances were as follows:
Percentage of Revenues Percentage of
9 unchanged sentences
There were no other third-party payors that individually accounted for more than 10% of our total revenue or accounts receivable for the periods shown in the table above.
−Removed: Loss Per Share
−Removed: Basic loss per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period.
−Removed: Diluted loss per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, vesting of RSUs and PSUs or purchases under the ESPP.
+Added: Earnings (loss) Per Share
+Added: Basic earnings (loss) per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period.
+Added: Diluted earnings (loss) per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, vesting of RSUs and PSUs or purchases under the ESPP.
The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents.
1 unchanged sentence
However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive.
−Removed: Because we reported a net loss for all periods presented, all potentially dilutive securities are antidilutive and are excluded from the computation of diluted loss per share for such periods.
−Removed: The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss per share for the years ended December 31, 2023 and 2022 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands):
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: The following table shows the computation of basic and diluted earnings (loss) per share for the following year ended December 31, 2024, 2023, and 2022 (in thousands, except per share data):
Years Ended December 31,
+Added: 2024 2023 2022
+Added: Net income (loss) $ 18,245 $ ( 57,466 ) $ ( 67,138 )
+Added: Weighted-average common shares outstanding, basic 27,776 26,802 26,054
+Added: Assumed exercise of stock options 457 — —
+Added: Assumed vesting of RSUs 858 — —
+Added: Assumed vesting of PSUs 144 — —
+Added: Assumed issuance of shares under the ESPP 20 — —
+Added: Weighted-average common shares outstanding, diluted 29,255 26,802 26,054
+Added: Earnings (loss) per share:
+Added: Basic $ 0.66 $ ( 2.14 ) $ ( 2.58 )
+Added: Diluted $ 0.62 $ ( 2.14 ) $ ( 2.58 )
+Added: Due to the Company reporting a net loss attributable to common stockholders for years ended December 31, 2023, and 2022, all potentially dilutive securities are antidilutive and are excluded from the computations of diluted loss per share.
+Added: The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted earnings (loss) per share for the years ended December 31, 2024, 2023, and 2022 because to do so would be antidilutive.
+Added: With regard to the PSUs, we assume that the associated performance targets will be met at the target level of performance for purposes of calculating diluted net income per common share until such time that it is probable that actual performance will be above or below target (in thousands):
+Added: Years Ended December 31,
+Added: 2024 2023 2022
Stock options 2,445 3,319 3,521
RSUs and PSUs 531 3,350 1,650
+Added: ESPP 160 330 146
Total 3,136 6,999 5,317
In addition, in connection with our acquisition of AltheaDx, Inc.
−Removed: (“AltheaDx”) in April 2022, we may be required to issue shares of our common stock to satisfy the contingent consideration obligations, pending the outcome of certain commercial and regulatory milestones, as required by the definitive agreement to acquire AltheaDx.
−Removed: For purposes of calculating diluted loss per share, no such shares were assumed to have been issued because none of the applicable conditions have been met to date.
+Added: (“AltheaDx”) in April 2022, no such shares were determined to have been issued and were excluded from the calculation of diluted income (loss) per share because none of the applicable conditions have been met during the earnout periods and based on the final valuation of the contingent consideration as required in the definitive agreement to acquire AltheaDx.
See Notes 6 and 12 for additional information.
2 unchanged sentences
Marketable Investment Securities
−Removed: The following tables present our available-for-sale debt securities (in thousands):
+Added: Marketable investment securities consisted of the following (in thousands):
+Added: As of December 31,
+Added: Trading securities (1)
+Added: Debt securities 169,866 144,258
+Added: Marketable investment securities $ 173,421 $ 144,258
+Added: (1) We had no trading securities as of December 31, 2023.
+Added: Trading securities
+Added: We recognized $ 0.6 million in gains, all of which were unrealized, on our trading securities for the year ended December 31, 2024.
+Added: We recognized no gains or losses for the years ended December 31, 2023 and 2022.
+Added: Debt securities
+Added: The following tables present our debt securities (in thousands):
December 31, 2024
6 unchanged sentences
Total $ 144,122 $ 143 $ ( 7 ) $ 144,258
−Removed: Although available to be sold to meet operating needs or otherwise, securities are generally held through maturity.
+Added: Although our U.S.
+Added: government securities are available to be sold to meet operating needs or otherwise, these securities are generally held through maturity.
We classify all investments as current assets, as these are readily available for use in current operations.
The cost of securities sold is determined based on the specific identification method for purposes of recording gains and losses.
−Removed: There were no realized gains or losses on sales of investments for the years ended December 31, 2023 and 2022.
−Removed: We evaluated our investment portfolio under the available-for-sale debt securities impairment model guidance and determined our investment portfolio is comprised of low-risk, investment grade securities.
−Removed: As of December 31, 2023, some of our available-for sale investments had unrealized losses which were not attributed to credit risk.
−Removed: As of December 31, 2022, unrealized losses on available-for-sale investments were not attributed to credit risk.
+Added: There were no realized gains or losses on sales of debt securities for the years ended December 31, 2024, 2023, and 2022.
+Added: We evaluated our U.S.
+Added: government securities under the available-for-sale debt securities impairment model guidance and determined our investment portfolio is comprised of low-risk, investment grade securities.
We believe that an allowance for credit losses is unnecessary because the unrealized losses on certain of our marketable investment securities are due to market factors.
−Removed: No credit-related or noncredit-related impairment losses were recorded for the years ended December 31, 2023 and 2022.
+Added: Unrealized losses were immaterial for the years ended December 31, 2024, 2023, and 2022.
+Added: In addition, there were no attributable credit risks, and no credit-related or noncredit-related impairment losses recognized, for the years ended December 31, 2024, 2023 and 2022.
The allowance for credit losses was zero as of December 31, 2024 and 2023.
As of December 31, 2024 and 2023, all of our available-for-sale debt securities had contractual maturities of one year or less.
−Removed: Accrued interest receivable is included in prepaid expenses and other current assets in our consolidated balance sheets.
+Added: Accrued interest receivable is included in prepaid expenses and other current assets in the consolidated balance sheets.
As of December 31, 2024 and 2023 the accrued interest receivable balance was immaterial.
Additional information relating to the fair value of marketable investment securities can be found in Note 12.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
AltheaDx, Inc.
2 unchanged sentences
The fair value of assets acquired and liabilities assumed primarily consisted of finite-lived intangible assets of $ 35.0 million, goodwill of $ 10.7 million, cash and cash equivalents of $ 3.5 million and deferred tax liabilities of $ 1.7 million.
−Removed: We have concluded that the transaction represents a business combination under ASC 805.
−Removed: The financial results of AltheaDx have been included in our consolidated financial statements since the date of the acquisition.
−Removed: The amount of revenue attributable to AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was $ 912,000 .
−Removed: The loss attributable to AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was approximately $ 12,372,000 .
+Added: We concluded that the transaction represents a business combination under ASC 805.
+Added: The financial results of AltheaDx have been included in the consolidated financial statements since the date of the acquisition.
+Added: The amount of revenue attributable to AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was $ 0.9 million.
+Added: The loss attributable to AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was approximately $ 12.4 million.
This amount did not reflect transaction costs from the acquisition or the effects of the valuation allowance reduction discussed in Note 16.
−Removed: Transaction costs associated with the acquisition were $ 1,711,000 for the year ended December 31, 2022 and were recognized as expenses, included in selling, general and administrative expenses in the consolidated statements of operations.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: We also agreed to pay up to an additional $ 75.0 million in cash and common stock in connection with the achievement of certain milestones based on 2022, 2023 and 2024 commercial milestones for the IDgenetix test (the “AltheaDx Earnout Payments”).
−Removed: Upon any achievement of each relevant milestone event, the associated payment will be paid 50 % in cash and 50 % in shares of our common stock based on a price per share equal to the volume-weighted-average price of our common stock for the 20 trading days as of the applicable milestone determination date.
−Removed: In accordance with the terms of the definitive agreement governing the acquisition of AltheaDx, the maximum number of shares of our common stock issuable to former AltheaDx security holders may not exceed 1,271,718 shares.
−Removed: Therefore, taking into consideration the number of shares already issued at closing, a maximum of 507,831 additional shares of our common stock remain issuable with respect to the AltheaDx Earnout Payments.
−Removed: In the event a number of shares in excess of 507,831 would otherwise be issuable in connection with the AltheaDx Earnout Payments, we will issue shares up to the maximum number permitted and pay cash for the remaining portion of the obligation.
−Removed: Contingent consideration liability associated with the AltheaDx Earnout Payments was zero as of the April 26, 2022 date of acquisition based on the expectations of achievement of the milestones.
+Added: Transaction costs associated with the acquisition were $ 1.7 million for the year ended December 31, 2022 and were recognized as expenses, included in SG&A expenses in the consolidated statements of operations.
+Added: In connection with the acquisition of AltheaDx, we also agreed to pay up to an additional $ 75.0 million in cash and common stock in connection with the achievement of certain milestones based on 2022, 2023, and 2024 commercial milestones for the IDgenetix test (the “AltheaDx Earnout Payments”).
+Added: Achievement of milestones required to receive additional payment of cash and issuance of stock were not met during the years ended December 31, 2024, 2023 and 2022 and as such, no payments were made during the same periods.
+Added: As of December 31, 2024, no future obligations exist relating to AltheaDx Earnout Payments and the contingent consideration period had ended.
+Added: Contingent consideration liability associated with the AltheaDx Earnout Payments was zero as of the April 26, 2022 date of acquisition and remained unchanged through the ending of the milestone performance period on December 31, 2024.
Our calculations of the consideration transferred and the purchase price allocation for the acquisition of AltheaDx were finalized as of December 31, 2022.
During the measurement period, we recorded adjustments to accrued liabilities, income taxes, intangible assets, contingent consideration and the resulting goodwill after finalizing our valuation of these items.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the acquisition-date fair value of the consideration transferred, summarizes the final allocation of the fair values of assets acquired and liabilities assumed in the acquisition of AltheaDx, and includes measurement period adjustments recorded during 2022 (in thousands, except for shares):
24 unchanged sentences
Total fair value of net assets assumed $ 49,149 $ ( 1,536 ) $ 47,613
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The fair value of the common stock issued was measured using the April 26, 2022 closing price of $ 22.40 per share, as reported by the Nasdaq Global Market.
−Removed: A portion of the upfront cash and stock consideration is being held in escrow for a specified period following closing to secure indemnification claims, if any.
+Added: A portion of the upfront cash and stock consideration was held in escrow following closing to secure indemnification claims, if any, and were released during the year ended December 31, 2023.
During the fourth quarter of 2022, we reversed losses originally recorded during the second and third quarters of 2022 that were associated with the remeasurement of contingent consideration before finalizing the valuation.
Also during the fourth quarter of 2022, we recorded an immaterial adjustment to reduce the amortization expense associated with the intangible asset.
+Added: The goodwill, which is not deductible for income tax purposes, was primarily attributable to potential future growth opportunities and the organized workforce.
The intangible asset is comprised of developed technology with an estimated useful life of 15 years and is being amortized on a straight-line basis.
−Removed: The goodwill, which is not expected to be deductible for income tax purposes, was primarily attributable to potential future growth opportunities and the organized workforce.
+Added: See Note 8 for additional information on the useful life of IDgenetix developed technology.
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information for the year ended December 31, 2022 combines our historical financial results and the results of AltheaDx, assuming that the companies were combined as of January 1, 2022, and includes adjustments for amortization expense from the acquired intangible assets and additional stock-based compensation expense.
−Removed: Non-recurring pro forma adjustments consist of acquisition-related transaction costs of $ 1,711,000 and an income tax benefit of $ 1,626,000 , both assumed to have been recognized during the year ended December 31, 2022 and therefore removed from the year ended December 31, 2022.
+Added: Non-recurring pro forma adjustments consist of acquisition-related transaction
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: costs of $ 1.7 million and an income tax benefit of $ 1.6 million, both assumed to have been recognized during the year ended December 31, 2022 and therefore removed from the year ended December 31, 2022.
The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2022 or (ii) the results of operations that are expected in future periods:
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Related Parties
−Removed: Maetzold, our President and Chief Executive Officer, and a member of our board of directors, and Daniel M.
+Added: Maetzold, our President and Chief Executive Officer (“CEO”), and a member of our board of directors, and Daniel M.
Bradbury, the Chairperson of our board of directors, each served on the board of directors of AltheaDx until the acquisition of AltheaDx was completed, were direct or indirect beneficial owners of AltheaDx securities and received consideration in connection with our acquisition of AltheaDx.
4 unchanged sentences
Oelschlager were direct or indirect beneficial owners of AltheaDx securities and received consideration in the transaction.
−Removed: These individuals may receive additional contingent consideration based on the achievement of certain commercial milestones relating to the AltheaDx Earnout Payments if the relevant commercial and regulatory milestone events occur.
−Removed: As of December 31, 2023 and December 31, 2022, our contingent consideration liability for the AltheaDx Earnout Payments was zero based on expectations of achievement of the milestones.
−Removed: See Note 11 for additional information.
Our entry into the definitive agreement to acquire AltheaDx was approved by our board of directors based upon the unanimous recommendation of a special transaction committee comprised entirely of independent members of our board of directors without any financial interest in AltheaDx or any conflict of interest with respect to the acquisition of AltheaDx.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: As of December 31, 2024, the milestone period ended, no future obligations existing relating to AltheaDx Earnout Payments, and contingent consideration liability was zero .
+Added: The named related parties did not receive additional contingent consideration over the duration of the milestone and contingent consideration period.
+Added: See Note 12 for additional information on fair value measurement of contingent consideration liability.
Property and Equipment, Net
2 unchanged sentences
Lab equipment 23,633 16,472
−Removed: $ 16,472 $ 9,721
Leasehold improvements 14,616 9,990
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Less accumulated depreciation ( 12,833 ) ( 8,111 )
−Removed: ( 8,111 ) ( 7,848 )
Property and equipment, net $ 51,122 $ 25,433
−Removed: (1) As of December 31, 2023 and December 31, 2022, includes lab equipment under finance lease of $ 369 thousand and accumulated depreciation of $ 278 thousand and $ 137 thousand, respectively.
+Added: (1) On February 9, 2024, we purchased approximately 23 acres of land in Friendswood, Texas for purpose of developing a commercial office building to be used as our future corporate headquarters.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Depreciation expense was recorded in the consolidated statements of operations as follows (in thousands):
Years Ended December 31,
+Added: 2024 2023 2022
Cost of sales (exclusive of amortization of acquired intangible assets) $ 2,950 $ 1,758 $ 874
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Goodwill and Other Intangible Assets, Net
−Removed: The balance of our goodwill was $ 10.7 million as of December 31, 2023 and 2022.
−Removed: There were no accumulated impairments of goodwill as of December 31, 2023 or 2022.
+Added: We had a single reporting unit where all goodwill was allocated for the years ended December 31, 2024, 2023 and 2022.
+Added: No impairment charges were recorded against goodwill for the years ended December 31, 2024, 2023 and 2022.
+Added: The balance of our goodwill, net zero accumulated impairments, was $ 10.7 million as of December 31, 2024 and 2023.
+Added: We had a single reportable segment consisting of a single operating segment where the operating segment and the single reporting unit where the same for the years ended December 31, 2024, 2023, and 2022.
+Added: See Note 17 for additional information on our reportable segment.
+Added: We conducted annual impairment testing of goodwill in the fourth quarter which indicated the fair value of our reporting unit exceeded its carrying value by 117 % and therefore no impairment was indicated.
+Added: To measure the fair value of our single reporting unit, we used a market approach whereby we calculated our total market capitalization on the impairment test date, based on the closing price of our common stock as reported on the Nasdaq Global Market, and applied a reasonable control premium.
+Added: The control premium was based on an analysis of control premiums paid in recent acquisitions of companies in the same or similar industry as us.
Other Intangible Assets, Net
Our other intangible assets, net consist of the following (in thousands):
−Removed: December 31, 2023
+Added: As of December 31, 2024
Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years)
2 unchanged sentences
Total other intangible assets, net $ 125,880 $ ( 30,343 ) $ 95,537
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: December 31, 2022
+Added: As of December 31, 2023
Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years)
2 unchanged sentences
Total other intangible assets, net $ 125,880 $ ( 19,237 ) $ 106,643
−Removed: The estimated future aggregate amortization expense as of December 31, 2023 is as follows (in thousands):
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: The estimated future aggregate amortization expense as of December 31, 2024 was as follows (in thousands):
Years Ending December 31,
+Added: 2025 $ 33,358
Thereafter 35,782
Total $ 95,537
−Removed: Amortization expense of intangible assets was $ 9.0 million and $ 8.3 million for the years ended December 31, 2023 and 2022, respectively.
+Added: On December 1, 2024, we revised the estimated remaining useful life of our IDgenetix developed technology intangible asset from approximately 12 years to 13 months, where the useful life is expected to end on December 31, 2025.
+Added: The change in estimate resulted in our recognition of an additional $ 2.1 million in expense from amortization of acquired intangible assets, reducing net income by the same amount, for the fourth quarter and year ended December 31, 2024.
+Added: The change in estimate is expected to increase expense from amortization of acquired intangible assets by approximately $ 24.3 million for the year ended December 31, 2025.
+Added: Amortization expense of intangible assets was $ 11.1 million, $ 9.0 million, and $ 8.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Other Accrued and Current Liabilities
4 unchanged sentences
ESPP contributions 1,225 896
+Added: Accrued taxes 1,076 401
Other 774 606
Total $ 7,993 $ 7,317
+Added: Long-Term Debt
+Added: We had no debt as of December 31, 2023.
+Added: Our long-term debt as of December 31, 2024 is presented in the table below (in thousands):
+Added: As of December 31, 2024
+Added: Term debt $ 10,200
+Added: Unamortized discount ( 177 )
+Added: Total debt, net 10,023
+Added: Current portion of long-term debt ( 278 )
+Added: Total long-term debt $ 9,745
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Future maturities of principal amounts on long-term debt as of December 31, 2024 were as follows (in thousands):
+Added: Years Ending December 31,
+Added: Total $ 10,000
+Added: 2024 Loan and Security Agreement
+Added: On March 26, 2024 (the ‘‘Closing Date’’), we entered into a Loan and Security Agreement (the ‘‘2024 LSA”), by and between us, our wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Lender’’).
+Added: The 2024 LSA provides for (i) on the Closing Date, $ 10.0 million aggregate principal amount of Term Loans (the “2024 Term Loan,” as more fully discussed in the ‘‘2024 Term Loan’’ section below), and (ii) from the Closing Date until March 31, 2025, an additional line of credit of $ 25.0 million with the same interest rate and maturity as the term debt available (the “2024 Credit Line,” as more fully discussed in the ‘‘2024 Credit Line’’ section below) at our option.
+Added: The obligations under the 2024 LSA are secured by substantially all of our assets, excluding intellectual property, the real property held by us, and are subject to certain other exceptions and limitations.
+Added: We have the right to prepay the 2024 LSA in whole, subject to a prepayment fee of approximately 1.50 % if prepaid prior to March 26, 2026.
+Added: Amounts repaid under the 2024 LSA may not be reborrowed.
+Added: In addition, the 2024 LSA contains customary conditions of borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness and make distributions to holders of our capital stock.
+Added: Should an event of default occur, including the occurrence of a material adverse change, we could be liable for immediate repayment of all obligations under the 2024 LSA.
+Added: Should we seek to amend the terms of the 2024 LSA, the consent of the Lender would be required.
+Added: As of December 31, 2024, we were in compliance with all of the covenants.
+Added: The 2024 LSA bears interest at a floating rate equal to the greater of (a) the WSJ Prime Rate plus 0.25 % or (b) 6.00 % per annum.
+Added: The Term Loans are interest only from the Closing Date through November 30, 2025, which may be extended at our option through November 30, 2026 as long as no event of default under the 2024 LSA has occurred.
+Added: After the end of the interest only period, we are required to pay equal monthly installments of principal through the maturity date of November 1, 2028.
+Added: We are also obligated to make an additional final payment of 2.00 % of the aggregate original principal amounts of Term Loans advanced by the Lender, due at the earlier of the maturity date or date the Term Loans are repaid in full.
+Added: 2024 Term Loan
+Added: On the Closing Date, we drew $ 10.0 million in Term Loans under the terms and provisions of the 2024 LSA.
+Added: We are obligated to make a final payment of $ 0.2 million under the terms of the 2024 LSA final payment provisions.
+Added: A discount on debt equal to this obligation was recorded on the draw date and is being amortized as additional interest expense using the effective interest method over the term of the debt.
+Added: As of December 31, 2024, no payment on principal has been made.
+Added: As of December 31, 2024, the weighted average effective interest rate for all outstanding debt under the 2024 Term Loan was 8.19 %.
+Added: 2024 Credit Line
+Added: We have a $ 25.0 million line of credit under the terms and provisions of the 2024 LSA available from the Closing Date until March 31, 2025.
+Added: Amounts repaid under the 2024 Credit Line may not be reborrowed.
+Added: As of December 31, 2024, no draws had been made on the 2024 Credit Line.
+Added: Interest Expense on Long-Term Debt
+Added: We recognized $ 0.5 million of interest expense for year ended December 31, 2024, the components of which included $ 0.7 million interest expense on long term debt less $ 0.2 million capitalized interest.
+Added: There was no interest expense on long term debt or capitalized interest for the years ended December 31, 2023 and 2022.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Operating Leases
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We lease general office and laboratory facilities in Pittsburgh Pennsylvania (the “Pittsburgh Lease”).
−Removed: The Pittsburgh Lease has a term of 10.5 years, a five-year renewal option, an early termination clause and a lease incentive allowance of $ 2.5 million to apply toward leasehold improvements.
−Removed: Of this amount, we have $ 1.3 million of lease incentives remaining as of December 31, 2023 to use for future leasehold improvements that will become available for use in 2026.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: The Pittsburgh Lease commenced in late 2022 under a term of 10.5 years, and with a five-year renewal option and an early termination clause.
+Added: On August 1, 2024, we amended our Pittsburgh Lease to take early possession of additional square footage under an expansion provision in the original contract at an earlier date than provided for under the original agreement.
+Added: The expansion option provided us with 23,821 additional square feet, most of which will be dedicated laboratory space, in exchange for an incremental increase in our fixed monthly payments.
+Added: The amendment did not change the end date under the original lease term, or provide any additional options not already provided for under the original agreement.
+Added: We evaluated the amendment under ASC Topic 842, Leases, and determined that it constituted a modification to an existing contract and assessed the classification remained an operating lease.
+Added: Following the modification, our obligations for the remaining lease term increased and we used $ 1.3 million of lease incentives for leasehold improvements.
+Added: As of December 31, 2024, we had no remaining credits for leasehold improvements under this contract.
+Added: In our remeasurement, we recognized an additional $ 0.6 million in operating lease assets in exchange for an equal amount of additional lease liabilities.
We have not included the optional renewal periods in the measurement of the lease obligations because it is not reasonably certain that we will exercise these renewal options.
1 unchanged sentence
Finance Lease
−Removed: In connection with the acquisitions of AltheaDx in April 2022 and Cernostics, Inc.
−Removed: (“Cernostics”) in December 2021, we assumed finance leases for laboratory equipment.
+Added: We lease office printers and other office equipment (the “Finance Leases”) for use across our facilities.
+Added: The Finance Leases commenced in June 2024 under a 64-month term, with an automatic one year extension that becomes effective unless we provide advanced notice of our intent not to extend the term, and a cash lease incentive of $ 0.2 million.
+Added: We currently do not expect to extend the term after the original term ends.
Discount Rates
−Removed: We discount our lease obligations using our incremental borrowing rate at the commencement date of the lease.
+Added: We discount our lease obligations using our incremental borrowing rate at the commencement date of the lease or as of the effective date of a lease modification.
The incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
−Removed: We primarily consider industry data, our credit rating and the lease term to determine our incremental borrowing rate.
+Added: As of March 26, 2024, we had outstanding borrowings under the 2024 LSA and referred to the interest rate of such debt for use as our incremental borrowing rate.
+Added: Prior to having outstanding borrowing under the 2024 LSA, we primarily considered industry data, our credit rating and the lease term to determine our incremental borrowing rate.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Lease Balances and Costs
8 unchanged sentences
Operating Noncurrent operating lease liabilities $ 14,345 $ 14,173
−Removed: Finance Other liabilities $ 25 $ 90
−Removed: Costs associated with our leases were included in the consolidated statement of operations as follows (in thousands):
+Added: Finance Noncurrent finance lease liabilities $ 311 $ 25
+Added: Lease costs included in the consolidated statement of operations were as follows (in thousands):
Years Ended December 31,
7 unchanged sentences
Total lease cost $ 3,049 $ 2,885 $ 2,619
−Removed: (1) Includes variable lease cost of $ 313 thousand and $ 371 thousand for the years ended December 31, 2023 and 2022, respectively.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: (1) Includes variable lease cost of $ 0.4 million, $ 0.3 million, and $ 0.4 million for the years ended December 31, 2024, 2023, and 2022 respectively.
Other Information
−Removed: Supplemental cash flow information on leases is as follows (in thousands):
+Added: Supplemental cash flow information for lease activities included in the consolidated statements of cash flows were as follows (in thousands):
Years Ended December 31,
+Added: 2024 2023 2022
Cash paid for amounts included in the measurement of lease liabilities
2 unchanged sentences
Financing cash flows from finance leases $ 97 $ 142 $ 122
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Information regarding the weighted-average lease term and weighted-average discount rate is presented below:
6 unchanged sentences
Finance leases 8.4 % 7.4 %
−Removed: The following is a maturity analysis of our operating lease and finance lease liabilities as of December 31, 2023 (in thousands):
+Added: Future maturities for operating lease and finance lease liabilities as of December 31, 2024 were as follows (in thousands):
Operating Leases Finance Leases
2 unchanged sentences
2026 2,399 98
+Added: 2027 2,443 98
+Added: 2028 2,494 98
+Added: 2029 2,544 73
Thereafter 9,929 —
2 unchanged sentences
Present value of lease payments $ 16,010 $ 412
−Removed: As of December 31, 2023, undiscounted future lease payments for leases that had not yet commenced was zero .
+Added: Undiscounted future lease payments for leases that had not yet commenced as of December 31, 2024 was zero .
Fair Value Measurements
4 unchanged sentences
Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions.
3 unchanged sentences
Accordingly, the fair value estimates disclosed, or amounts recorded may not be indicative of the amount that we or holders of the instruments could realize in a current market exchange.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The table below provides information by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2024 and 2023 (in thousands):
7 unchanged sentences
$ 169,866 $ — $ — $ 169,866
−Removed: Contingent consideration (3)
+Added: Trading securities (2)
$ 3,555 $ — $ — $ 3,555
+Added: Term Debt (3)
+Added: $ — $ 10,023 $ — $ 10,023
As of December 31, 2023
6 unchanged sentences
$ 144,258 $ — $ — $ 144,258
−Removed: Contingent consideration (3)
−Removed: $ — $ — $ — $ —
(1) Classified as “Cash and cash equivalents” in the consolidated balance sheets.
(2) Classified as “Marketable investment securities” in the consolidated balance sheets.
−Removed: (3) Current portion, if any, classified as “Other accrued and current liabilities” in the consolidated balance sheets.
+Added: (3) Classified as “Current portion of long-term debt” and “Long term debt” in the consolidated balance sheets.
Contingent Consideration
−Removed: In connection with our acquisition of Cernostics in December 2021, we recorded a liability for contingent consideration of up to $ 50.0 million that could have been payable based on the achievement of certain commercial milestones relating to the year ending December 31, 2022 (“Cernostics Earnout Payments”).
−Removed: At our sole discretion, we could have settled Cernostics Earnout Payments in cash or shares of our common stock, subject to certain limitations.
−Removed: The aggregate number of shares that could have been issued for the Cernostics Earnout Payments could not have exceeded 5,034,653 shares.
−Removed: Any Cernostics Earnout Payments in shares of our common stock could have been based on the volume weighted-average price of our common stock for the 15 trading days ending December 30, 2022.
−Removed: There were no Cernostics Earnout Payments that became payable because the commercial milestones were not achieved during the earnout period and the final valuation of the contingent consideration was assessed to be zero as of December 31, 2022.
−Removed: The fair value of the contingent consideration associated with our
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: acquisition of Cernostics decreased by $ 18.3 million for the year ended December 31, 2022 with no similar activity for the year ended December 31, 2023.
+Added: In connection with our acquisition of Cernostics in December 2021, we recorded a liability for contingent consideration that was payable based on the achievement of certain commercial milestones relating to the year ending December 31, 2022 (“Cernostics Earnout Payments”).
+Added: There were no Cernostics Earnout Payments that became payable because the commercial milestones were not achieved during the earnout period and the final valuation of the contingent consideration was assessed to be zero as of December 31, 2022, resulting in a loss of $ 18.3 million associated with the change in fair value of the contingent consideration.
In connection with our acquisition of AltheaDx, we agreed to pay contingent consideration of up to $ 75.0 million relating to the AltheaDx Earnout Payments, as discussed further in Note 6.
−Removed: The portions of the AltheaDx Earnout Payments associated with the commercial milestones for the years ended December 31, 2023 and 2022 were $ 37.5 million and $ 35.0 million, respectively, and were not paid since the applicable commercial milestones were not met.
−Removed: Also, the year 2023 contained a 2022 catch-up provision for additional payment up to $ 17.5 million, dependent on achievement of results in excess of the 2023 milestone, and was not paid since the milestone was not met.
−Removed: Therefore, as of December 31, 2023, we have a remaining potential payment obligation of up to $ 20.0 million with respect to the remaining commercial milestones for 2024.
−Removed: If the settlement of the remaining portion of the AltheaDx Earnout Payments would have occurred on December 31, 2023, no amounts would have been due because no commercial milestones had been achieved as of such date.
+Added: The portions of the AltheaDx Earnout Payments associated with the commercial milestones for the years ended December 31, 2024, 2023 and 2022 were $ 20.0 million, $ 37.5 million (contained a 2022 catch-up provision for additional payment up to $ 17.5 million) and $ 35.0 million, respectively, and were not paid at each of these milestone events due to the applicable commercial milestones not being met.
The contingent consideration was classified as a Level 3 fair value measurement due to the use of significant unobservable inputs and a Monte Carlo simulation to determine its fair value.
2 unchanged sentences
See Note 6 for additional information on the measurement period adjustment.
−Removed: There have been no changes in the fair value of the AltheaDx contingent consideration during the year ended December 31, 2023.
−Removed: The contingent consideration liability is remeasured at fair value at each reporting period taking into account any updated assumptions or changes in circumstances.
−Removed: Any changes in the fair value are recorded as gains or losses in our consolidated statement of operations.
+Added: There were no AltheaDx Earnout Payments that became payable because the commercial milestones were not achieved during the earnout periods and the final valuation of the contingent consideration was assessed to be zero as of December 31, 2024.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: No gains or losses were recorded associated with changes in fair value during the years ended December 31, 2024, 2023, and 2022.
+Added: The contingent consideration liability was remeasured at fair value at each reporting period taking into account any updated assumptions or changes in circumstances.
+Added: Any changes in the fair value were recorded as gains or losses in the consolidated statement of operations.
A measurement period adjustment was recognized in the fourth quarter of 2022 to reverse the preliminary valuation of the contingent consideration and losses recorded during the interim period.
2 unchanged sentences
We believe there is no threatened litigation or litigation pending that could have, individually or in the aggregate, a material adverse effect on our financial position, results of operations or cash flows.
−Removed: On February 1, 2024, we received a subpoena from United States Department of Health and Human Services Office of Inspector General and are fully cooperating with the government’s inquiry.
−Removed: This inquiry, and any potential resulting claim asserted against us, with or without merit, could be time-consuming, expensive to address and divert management’s attention and other resources.
−Removed: These claims also could subject us to significant liability for damages and harm our reputation.
+Added: On February 1, 2024, we received a Subpoena from the Department of Health and Human Services, Office of Inspector General, seeking documents and information concerning claims submitted for payment under federal healthcare programs.
+Added: The Subpoena requested that we produce documents relating primarily to interactions with medical providers and billing to government-funded healthcare programs for our tests.
+Added: The time period covered by the Subpoena is January 1, 2015 through February 1, 2024.
+Added: We are continuing to cooperate with the government’s request and are in the process of responding to the Subpoena.
+Added: We are unable to predict what action, if any, might be taken in the future by the Department of Health and Human Services, Office of Inspector General, or any other governmental authority as a result of the matters related to this Subpoena.
+Added: No claims have been made against us at this time.
+Added: Any potential claims could subject us to significant liability for damages and harm our reputation.
Our insurance and indemnities may not cover all claims that may be asserted against us.
6 unchanged sentences
Stock Incentive Plans and Stock-Based Compensation
−Removed: Stock Incentive Plans
−Removed: Our stock incentive plans provide for the granting of options to purchase common stock and other equity-based awards to our employees, directors and consultants.
−Removed: On September 6, 2008, we adopted the 2008 Stock Plan (the “2008 Plan”), on August 15, 2018, we adopted the 2018 Stock Plan (the “2018 Plan”) and on July 24, 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).
−Removed: Following the adoption of the 2018 Plan, no additional stock awards were granted under the 2008 Plan and following the adoption of the 2019 Plan, no additional stock awards were granted under the 2018 Plan.
+Added: Equity Incentive Plans
+Added: On July 24, 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).
+Added: As of December 31, 2024, there were 791,974 shares remained available for grant under the 2019 Plan.
+Added: The 2019 Plan provides for automatic annual increases to the number of shares authorized for issuance, equal to 5 % of our common shares outstanding as of the immediately preceding year end, through January 1, 2029.
+Added: Under this provision, effective January 1, 2025, an additional 1,424,159 shares became available under the 2019 Plan.
+Added: Prior to adopting the 2019 Plan, we had adopted the 2008 Stock Plan (the “2008 Plan”) on September 6, 2008 and the 2018 Stock Plan (the “2018 Plan”) on August 15, 2018.
+Added: No additional shares have been issued from each respective plan following the chronological adoption of each succeeding plan.
+Added: Our stock incentive plans provide for the granting of awards to employees, directors, and consultants.
+Added: Available awards under our incentive plans include options to purchase common stock as well as RSU, PSUs, and other equity-based awards providing recipients the right to receive common shares.
+Added: Inducement Plan
On December 22, 2022, our board of directors approved the 2022 Inducement Plan (the “Inducement Plan”).
−Removed: Our Inducement Plan provides for the grant of RSU awards and other
+Added: The Inducement Plan provides for the granting of awards as inducement material to the grantee’s entering into employment with us to the extent such grantee was not previously an employee of ours or is entering into employment following a bona fide period of non-employment with us.
+Added: Our Inducement Plan provides for the grant of RSU awards and other stock awards made as an inducement material to the grantee’s entering into employment with us to the extent such grantee was not previously an employee of ours or is entering into employment following
CASTLE BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: stock awards made as an inducement material to the grantee’s entering into employment with us to the extent such grantee was not previously an employee of ours or is entering into employment following a bona fide period of non-employment with us.
+Added: a bona fide period of non-employment with us.
As of December 31, 2024, there were 191,156 shares available for grant under the Inducement Plan.
−Removed: Options under the plans may be granted as incentive stock options (“ISO”) or non-statutory stock options (“NSOs”).
−Removed: ISOs may only be granted to our employees (including directors who are also considered employees).
−Removed: NSOs may be granted to our employees, directors and consultants.
+Added: Options Granted Under our Plans
+Added: Our 2019 Plan and Inducement Plan provide for the granting of options in form of incentive stock options (“ISO”) and non-statutory stock options (“NSOs”).
+Added: ISOs may only be granted to our employees and employee-directors.
+Added: NSOs may be granted to our employees, employee-directors, nonemployee directors, and consultants.
Options may be granted for terms up to ten years from the date of grant, as determined by the board of directors;
3 unchanged sentences
We issue new shares to satisfy option exercises.
−Removed: As of December 31, 2023, 366,432 shares remained available for grant under the 2019 Plan.
−Removed: The 2019 Plan provides for automatic annual increases to the number of shares authorized for issuance, equal to 5 % of our common shares outstanding as of the immediately preceding year end, through January 1, 2029.
−Removed: Under this provision, effective January 1, 2024, an additional 1,370,526 shares became available under the 2019 Plan.
Stock Options
15 unchanged sentences
Balance as of December 31, 2023 3,208,979 $ 35.38
+Added: Granted 3,379 $ 71.22
+Added: Exercised ( 135,875 ) $ 14.85
+Added: Forfeited/Cancelled ( 86,720 ) $ 39.74
+Added: Balance as of December 31, 2024 2,989,763 $ 36.23 5.5 $ 11,709
Exercisable at December 31, 2024 2,819,446 $ 35.88 5.5 $ 11,684
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Restricted Stock Units
2 unchanged sentences
We issue new shares of common stock upon the vesting of RSUs.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes our RSU activity for the years ended December 31, 2024, 2023, and 2022:
9 unchanged sentences
Balance as of December 31, 2023 2,805,075 $ 25.48
+Added: Granted 1,708,028 $ 22.37
+Added: ( 982,403 ) $ 27.68
+Added: Forfeited/Cancelled ( 334,476 ) $ 21.79
+Added: Balance as of December 31, 2024 3,196,224 $ 23.52
(1) The aggregate number of shares withheld upon vesting for employee tax obligations was 281,275 , 254,197 , and 73,821 for the years ended December 31, 2024, 2023 and 2022, respectively.
2 unchanged sentences
We issue new shares of common stock upon the vesting of PSUs.
+Added: On August 9, 2024 (the “Initial Vesting Date”), the Board certified that the revenue goal for the PSUs granted on December 23, 2022 (“2022 PSUs”) was achieved.
+Added: Therefore, 50 % of the 2022 PSUs were vested and we immediately recognized approximately $ 0.1 million of stock-based compensation related to this performance metric.
+Added: The remaining 50 % of the 2022 PSUs are all subject to time-based vesting and will vest in full on the one-year anniversary of the Initial Vesting Date.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes our PSU activity for the year ended December 31, 2024:
7 unchanged sentences
Balance as of December 31, 2023 196,033 $ 23.23
+Added: Granted 177,513 $ 21.23
+Added: ( 98,018 ) $ 23.23
+Added: Forfeited/Cancelled — $ —
+Added: Balance as of December 31, 2024 275,528 $ 21.94
+Added: (1) The aggregate number of shares withheld upon vesting for employee tax obligations was 30,046 for the year ended December 31, 2024 .
Retirement Policy
−Removed: In January 2023, our board of directors approved a retirement policy (the “Retirement Policy”) that provides for acceleration of a portion of unvested awards that were granted to certain eligible employees upon meeting age, service and notice requirements.
−Removed: We considered the adoption of the Retirement Policy to be a modification of existing awards under ASC Topic 718, Compensation – Stock Compensation.
−Removed: The modification did not result in any incremental compensation cost.
−Removed: However, the adoption of the of the policy resulted in a new estimate of the requisite service period for certain awards, which we reassess at each balance sheet date.
−Removed: In connection with the
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
−Removed: Retirement Policy, we accelerated the recognition of compensation expense of $ 1.6 million during the year ended December 31, 2023.
+Added: In January 2023, our board of directors approved a retirement policy (the “Retirement Policy”) that provides for acceleration of a portion of unvested awards granted to and held by certain eligible employees upon meeting age, service and notice requirements.
+Added: No shares vested under this policy during the years ended December 31, 2024 and 2023.
Employee Stock Purchase Plan
10 unchanged sentences
We issue new shares to satisfy the ESPP purchases.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Determining Fair Value - Summary of Assumptions
+Added: We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs.
We use the Black-Scholes option pricing model to estimate the fair value of stock options and purchase rights granted under the ESPP at the date of grant, start of the offering or other relevant measurement date.
10 unchanged sentences
• Dividend yield .
−Removed: We have not paid, and does not have plans to pay, cash dividends.
+Added: We have not paid, and do not have plans to pay, cash dividends.
Therefore, we use an expected dividend yield of zero in the Black-Scholes option valuation model.
The fair value of our common stock is also an assumption used to determine the fair value of stock options.
−Removed: Prior to our initial public offering of common stock on July 29, 2019 (the “IPO”), our common stock was not publicly traded, therefore we estimated the fair value of our common stock.
−Removed: Following the IPO, the fair value of our common stock is the closing selling price per share of its common stock as reported on the Nasdaq Global Market on the date of grant or other relevant determination date.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: The fair value of our common stock is the closing selling price per share of its common stock as reported on the Nasdaq Global Market on the date of grant or other relevant determination date.
We use the Black-Scholes option pricing model to estimate the fair value of each option grant on the date of grant or any other measurement date.
1 unchanged sentence
Years Ended December 31,
+Added: 2024 2023 2022
Average expected term (years) 5.0
1 unchanged sentence
75.57 % - 76.01 %
+Added: 68.34 % - 75.02 %
Risk-free interest rate 4.39 % - 4.39 %
3.57 % - 3.57 %
+Added: 1.54 % - 4.21 %
Dividend yield — %
1 unchanged sentence
Years Ended December 31,
+Added: 2024 2023 2022
Average expected term (years) 1.2
2 unchanged sentences
72.80 % - 130.95 %
+Added: 62.98 % - 91.78 %
Risk-free interest rate 3.82 % - 5.14 %
4.74 % - 5.33 %
+Added: 0.60 % - 3.45 %
Dividend yield — %
−Removed: We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Fair Value and Intrinsic Value
+Added: For the years ended December 31, 2024, 2023, and 2022 the weighted-average grant date fair value of stock options was $ 9.23 , $ 15.99 , and $ 14.34 per option, respectively, and the weighted-average grant date fair value of the purchase rights granted under the ESPP was $ 12.66 , $ 11.43 , and $ 16.79 per share, respectively.
+Added: The aggregate intrinsic value of stock options exercised during the years ended December 31, 2024, 2023, and 2022 was $ 1.7 million, $ 1.3 million, and $ 3.7 million, respectively.
+Added: The aggregate intrinsic value of shares issued under the ESPP was $ 1.0 million , $ 0.5 million, and $ 0.5 million during the years ended December 31, 2024, 2023, and 2022, respectively.
+Added: The aggregate fair value of RSUs that vested during the years ended December 31, 2024, 2023, and 2022 was $ 27.7 million , $ 18.1 million, and $ 5.9 million, respectively.
Stock-Based Compensation Expense
1 unchanged sentence
Years Ended December 31,
+Added: 2024 2023 2022
Cost of sales (exclusive of amortization of acquired intangible assets) $ 5,529 $ 4,938 $ 3,755
2 unchanged sentences
Total stock-based compensation expense $ 50,320 $ 51,219 $ 36,321
−Removed: For the years ended December 31, 2023 and 2022, the weighted-average grant date fair value of stock options was $ 15.99 and $ 14.34 per option, respectively, and the weighted-average grant date fair value of the purchase rights granted under the ESPP was $ 11.43 and $ 16.79 per share, respectively.
−Removed: As of December 31, 2023, the total unrecognized stock-based compensation cost related to outstanding awards was $ 85,536,000 , which is expected to be recognized over a weighted-average period of 2.3 years.
+Added: As of December 31, 2024, the total unrecognized stock-based compensation cost related to outstanding awards was $ 71.1 million, which is expected to be recognized over a weighted-average period of 2.2 years.
The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur.
−Removed: The aggregate intrinsic value of stock options exercised during the years ended December 31, 2023 and 2022 was $ 1,282,000 and $ 3,745,000 , respectively.
−Removed: The aggregate intrinsic value of shares issued under the ESPP was $ 479,000 and $ 534,000 during the years ended December 31, 2023 and 2022, respectively.
−Removed: The aggregate fair value of RSUs that vested during the years ended December 31, 2023 and 2022 was $ 18,084,000 and $ 5,863,000 , respectively.
−Removed: No tax benefits related to stock-based compensation were recorded in the consolidated statements of operations during the years ended December 31, 2023 and 2022 due to the valuation allowance on net deferred tax assets.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Included in total stock-based compensation expense for the years ended December 31, 2024 and 2023 is $ 0.7 million and $ 1.6 million, respectively, from the accelerated recognition of expense for modifications of awards falling in scope of the Retirement Policy.
+Added: The Retirement Policy was adopted in January 2023, so there was no accelerated recognition of stock-based compensation expense for the year ended December 31, 2022.
+Added: No tax benefits related to stock-based compensation expense were recorded in the consolidated statements of operations during the years ended December 31, 2024, 2023, and 2022 due to the valuation allowance on net deferred tax assets.
The components of income tax expense (benefit) are as follows (in thousands):
Years Ended December 31,
+Added: 2024 2023 2022
Current tax expense
7 unchanged sentences
Total income tax expense (benefit) $ 3,319 $ 101 $ ( 1,766 )
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The differences between income taxes expected at the U.S.
1 unchanged sentence
Years Ended December 31,
−Removed: Pre-tax loss $ ( 57,365 ) $ ( 68,904 )
+Added: 2024 2023 2022
+Added: Pre-tax income (loss) $ 21,564 $ ( 57,365 ) $ ( 68,904 )
federal taxes at statutory rate 4,528 ( 12,046 ) ( 14,470 )
State income taxes 683 925 ( 3,751 )
−Removed: Research and development tax credit ( 2,186 ) ( 1,814 )
+Added: R&D tax credit ( 3,381 ) ( 2,186 ) ( 1,814 )
Change in valuation allowance ( 4,469 ) 5,207 17,075
4 unchanged sentences
Permanent differences 1,712 1,474 —
+Added: Other 67 27 26
Income tax expense (benefit) $ 3,319 $ 101 $ ( 1,766 )
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Significant components of deferred tax assets and liabilities are as follows (in thousands):
1 unchanged sentence
Deferred tax assets:
−Removed: Net operating loss (“NOL”) carryforwards $ 47,162 $ 49,253
+Added: NOL carryforwards $ 31,782 $ 47,162
Accrued liabilities 7,301 6,466
11 unchanged sentences
ROU assets ( 2,558 ) ( 2,799 )
−Removed: Section 481(a) adjustment (cash to accrual) — ( 956 )
Other ( 185 ) ( 31 )
1 unchanged sentence
Net deferred tax liability $ ( 1,607 ) $ ( 206 )
−Removed: At December 31, 2023, we had NOL carryforwards for federal income tax purposes of approximately $ 197,143,000 of which $ 92,045,000 will begin to expire in 2029 if not utilized to offset taxable income, and $ 105,098,000 may be carried forward indefinitely.
+Added: As of December 31, 2024, we had federal NOL carryforwards of approximately $ 129.4 million of which $ 52.9 million will begin to expire in 2031 if not utilized to offset taxable income, and $ 76.5 million may be carried forward indefinitely.
Future changes in ownership, as defined by Section 382 of the IRC, could limit the amount of NOL carryforwards used in any one year.
−Removed: Also, as of December 31, 2023, we had state NOL carryforwards of approximately $ 114,294,000 , which begin to expire in 2028 if not utilized to offset state taxable income.
−Removed: Our R&D tax credit carryforwards of $ 8,025,000 , which includes $ 655,000 of state credits at December 31, 2023, will begin to expire in 2034 if not utilized to offset federal income tax.
+Added: As of December 31, 2024, we had state NOL carryforwards of approximately $ 86.5 million, which begin to expire in 2028 if not utilized to offset state taxable income.
+Added: As of December 31, 2024,
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: we had R&D tax credit carryforwards of $ 9.7 million, which includes $ 0.9 million of state credits, which will begin to expire in 2034 if not utilized to offset federal income tax.
In general, under Section 382 and 383 of the IRC, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and certain tax credits, to offset future taxable income and tax.
2 unchanged sentences
These changes in ownership did not result in the expiration of any NOLs or R&D credits.
−Removed: However, future changes in ownership may further limit the ability of us to utilize our NOL carryforwards and R&D tax credit carryforwards.
+Added: However, future changes in ownership may further limit our ability to utilize our NOL carryforwards and R&D tax credit carryforwards.
We have also performed Section 382 analyses with respect to the NOLs we obtained in our acquisitions of Cernostics and AltheaDx.
−Removed: Based on changes in ownership that have occurred, $ 36,347,000 of NOLs are expected to expire unused as a result of Section 382 limitations.
−Removed: During the year ended December 31, 2022, in connection with the acquisition of AltheaDx, we recorded additional net deferred tax liability of $ 1,672,000 , primarily due to book-tax differences related to the acquired intangible assets.
−Removed: As a result of these additional deferred tax liabilities, we determined that $ 1,626,000 of our valuation allowance should be reduced, which was reflected in our income tax benefit for the year ended December 31, 2022.
−Removed: At December 31, 2023 and 2022, we placed a valuation allowance of $ 55,028,000 and $ 49,953,000 , respectively, against our net deferred tax asset balance, as we have determined that it is more likely than not that they will not be realized.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Based on changes in ownership that have occurred, $ 36.3 million of NOLs are expected to expire unused as a result of Section 382 limitations.
+Added: As of December 31, 2024 and 2023, we placed a valuation allowance of $ 50.5 million and $ 55.0 million, respectively, against our net deferred tax asset balance, as we have determined that it is more likely than not that they will not be realized.
+Added: The valuation allowance as of December 31, 2024 and 2023 was primarily related to NOL and R&D tax credit carryforwards that more likely than not, will expire unused.
+Added: The net change in total valuation allowance for each of the years ended December 31, 2024, 2023 and 2022 was a decrease of $ 4.5 million, an increase of $ 5.1 million, and an increase of $ 32.2 million, respectively.
+Added: During the year ended December 31, 2022, in connection with the acquisition of AltheaDx, we recorded additional net deferred tax liability of $ 1.7 million, primarily due to book-tax differences related to the acquired intangible assets.
+Added: As a result of these additional deferred tax liabilities, we determined that $ 1.6 million of our valuation allowance should be reduced, which was reflected in our income tax benefit for the year ended December 31, 2022.
We assessed whether we had any significant uncertain tax positions related to open tax years and concluded there were none.
2 unchanged sentences
federal income tax purposes for fiscal years prior to 2021 and fiscal years prior to 2020 for multiple state jurisdictions.
−Removed: However, since we have been in an NOL position since 2008, our 2008 to 2019 federal tax returns and our 2008 to 2018 state tax returns are potentially subject to examination adjustments to the extent of those NOL carryforwards.
−Removed: Subsequent Events
−Removed: On July 10, 2023, following approval by our board of directors, we entered into a definitive agreement to purchase a plot of land located in Friendswood, Texas for a purchase price of $ 7.6 million, subject to certain adjustments, for the purpose of developing a commercial office building which may be used as our future corporate headquarters.
−Removed: Under the agreement, we had the option to terminate the contract within 90 days, for any reason.
−Removed: On October 4, 2023, we amended the definitive agreement to extend the option period by an additional 30 days.
−Removed: On January 9, 2024, we amended the definitive agreement to obtain easement rights on an adjacent property for purpose of constructing storm drainage improvements and appurtenances on the property.
−Removed: On February 9, 2024, we closed on the purchase of the land for cash consideration of $ 7.2 million .
+Added: However, since we have been in an NOL position since 2008 until recently, our 2008 to 2020 federal tax returns and our 2008 to 2019 state tax returns are potentially subject to examination adjustments to the extent of those NOL carryforwards.
+Added: No material amounts of tax-related interest or penalties were recorded during the years ended December 31, 2024, 2023, and 2022.
+Added: Segment and Related Information
+Added: The Company derives revenues through the delivery of test reports for our molecular diagnostic tests.
+Added: Clinicians use the results from these tests to aid in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus, uveal melanoma, and in the treatment of mental health conditions.
+Added: All of our operations are located within the United States and our business is focused on the U.S.
+Added: Budgets and financial information for net revenues are maintained and are regularly reviewed for each of our tests but expense information is not maintained and readily available below the consolidated results of operations level of aggregation.
+Added: We have a single reportable segment consisting of a single operating segment where our CEO is our CODM, which aligns with how our business is organized and is managed.
+Added: The accounting policies and measurements of income before income taxes and discontinued operations for the consolidated financial statements and the reportable segment are the same.
+Added: The CODM assesses segment performance using actual-to-actual and actual-to-budget variance analysis for segment net revenues, significant segment expenses, and net income to assess segment performance and in deciding how to allocate resources.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: For the years ended December 31, 2024, 2023 and 2022, the measures of segment profit and loss for of our single reportable segment were as follows (in thousands):
+Added: Years ended December 31,
+Added: 2024 2023 2022
+Added: Net revenues from external customers (1)
+Added: $ 332,069 $ 219,788 $ 137,039
+Added: Significant segment expenses:
+Added: Personnel costs 189,883 172,248 134,557
+Added: Organizational and business development costs 44,178 39,481 31,894
+Added: Inventory usage 19,930 15,475 9,859
+Added: Clinical studies and publication costs 9,951 11,924 8,997
+Added: Professional services 10,476 7,496 10,070
+Added: Other segment items 39,406 30,630 8,800
+Added: Segment profit (loss) $ 18,245 $ ( 57,466 ) $ ( 67,138 )
+Added: (1) For information on disaggregation of segment revenue by type and information about payor concentration, see Note 3.
+Added: Significant segment expenses
+Added: Personnel costs
+Added: Personnel costs consist of salaries and wages, bonuses, employee benefits, stock-based compensation expense, and payroll taxes.
+Added: Personnel costs are a significant portion of operating expenses and are a component of cost of sales, research and development expense, and selling and general administrative expense.
+Added: Our CODM considers this information injunction with test report deliveries in assessing budgeted and actual operational performance and in allocating resources.
+Added: Organizational and business development costs
+Added: Organizational and business development costs include expense incurred for travel, transportation, meals and lodging, training, and conference and venue fees and are a component of cost of sales, research and development expense, and selling and general administrative expense.
+Added: Our CODM considers this information in their assessment of operating expense results and in planning and budgeting for future corporate development activities.
+Added: Inventory usage
+Added: Inventory usage is the expense incurred through direct materials used in processing our tests, and are significant component of our cost of sales.
+Added: Our CODM considers this information injunction with test report deliveries in assessing budgeted and actual operational performance and in allocating resources.
+Added: Clinical studies and publication costs
+Added: Clinical studies and publication costs include expenses incurred through our pipeline initiatives as well as in gathering evidence to support the clinical validity and utility of our existing test portfolio.
+Added: Our CODM considers this information in their assessment of research and development results and in planning and budgeting activities.
+Added: Professional services
+Added: Professional services include expenses incurred for legal and advisory services across our business as well as expenses incurred for services provided by our independent auditors.
+Added: Professional service expenses are a component of cost of sales, research and development expense, and selling and general administrative expense.
+Added: Our CODM considers this information in their assessment of operating expense results and in planning and budgeting activities.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
+Added: Other segment items
+Added: Other segment items include all other operating expenses types to included IT service and software licensing costs, fixed and variable expenses incurred for leasing of facilities and equipment, depreciation and amortization, changes in fair value of contingent consideration, gain or losses on disposal of fixed assets in the routine course of business, fair value adjustment for trading securities, realized gains or losses on investment securities, administrative costs, expense for use of prepaids to include insurance premiums and warranties for lab equipment, public company costs (less audit fees), interest and other non-operating income, and income tax expense or benefits.
+Added: Our CODM does not individually review budgets or results for these activities.
+Added: Other amounts included in the measure of segment profit or loss for the years ended December 31, 2024, 2023 and 2022 were as follows (in thousands):
+Added: Years ended December 31,
+Added: 2024 2023 2022
+Added: Interest income $ 12,916 $ 10,623 $ 3,968
+Added: Interest expense 577 11 17
+Added: Depreciation and amortization 15,997 12,330 10,543
+Added: Income tax expense (benefit) 3,319 101 ( 1,766 )
+Added: Stock-based compensation expense 50,320 51,219 36,321
+Added: Changes in fair value of trading securities 555 — —
+Added: Change in fair value of contingent consideration — — ( 18,287 )
+Added: Total assets for our reportable segment were located in the United States and were $ 531.2 million and $ 453.3 million as of December 31, 2024 and 2023, respectively.
+Added: Expenditures for additions to long-lived assets were $ 29.3 million, $ 13.5 million, and $ 7.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.