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Item 1. Financial Statements

2025-08-04 compared with 2025-05-05 · 257 added, 154 removed, 540 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

ASSETS (unaudited)

6 unchanged sentences

Total current assets 348,668 360,154

Long-term marketable investment securities 5,570 —

Long-term accounts receivable, net 1,132 918

8 unchanged sentences

Accrued compensation 24,973 32,555

Contingent consideration 1,000 —

Operating lease liabilities 1,571 1,665

3 unchanged sentences

Long-term debt 8,096 9,745

Noncurrent portion of contingent consideration 1,500 —

Noncurrent operating lease liabilities 25,377 14,345

5 unchanged sentences

Preferred stock, $ 0.001 par value per share;

10,000,000 shares authorized as of March 31, 2025 and December 31, 2024;

no shares issued and outstanding as of March 31, 2025 and December 31, 2024

10,000,000 shares authorized as of June 30, 2025 and December 31, 2024;

no shares issued and outstanding as of June 30, 2025 and December 31, 2024

Common stock, $ 0.001 par value per share;

200,000,000 shares authorized as of March 31, 2025 and December 31, 2024;

28,844,937 and 28,483,195 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

200,000,000 shares authorized as of June 30, 2025 and December 31, 2024;

28,981,151 and 28,483,195 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 676,759 655,703

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

NET REVENUES $ 86,188 $ 87,002 $ 174,176 $ 159,976

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Total operating expenses, net 90,439 81,990 206,355 160,435

Operating loss ( 27,928 ) ( 5,471 )

Operating (loss) income ( 4,251 ) 5,012 ( 32,179 ) ( 459 )

Interest income 2,944 3,144 6,043 6,140

1 unchanged sentence

Interest expense ( 21 ) ( 270 ) ( 38 ) ( 284 )

Loss before income taxes ( 26,271 ) ( 2,489 )

Income tax (benefit) expense ( 423 ) 45

Net loss $ ( 25,848 ) $ ( 2,534 )

Loss per share, basic and diluted $ ( 0.90 ) $ ( 0.09 )

Weighted-average shares outstanding, basic and diluted 28,609 27,485

(Loss) income before income taxes ( 143 ) 7,886 ( 26,414 ) 5,397

Income tax benefit ( 4,666 ) ( 1,034 ) ( 5,089 ) ( 989 )

Net income (loss) $ 4,523 $ 8,920 $ ( 21,325 ) $ 6,386

Earnings (loss) per share:

Basic $ 0.16 $ 0.32 $ ( 0.74 ) $ 0.23

Diluted $ 0.15 $ 0.31 $ ( 0.74 ) $ 0.22

Weighted-average shares outstanding:

Basic 28,914 27,646 28,763 27,566

Diluted 29,545 28,738 28,763 28,542

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended

Net loss $ ( 25,848 ) $ ( 2,534 )

June 30, Six Months Ended

2025 2024 2025 2024

Net income (loss) $ 4,523 $ 8,920 $ ( 21,325 ) $ 6,386

Other comprehensive loss:

Net unrealized loss on marketable investment securities ( 92 ) ( 61 ) ( 191 ) ( 308 )

Comprehensive loss $ ( 25,947 ) $ ( 2,781 )

Comprehensive income (loss) $ 4,431 $ 8,859 $ ( 21,516 ) $ 6,078

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5 unchanged sentences

Deficit Accumulated

Other Comprehensive (Loss) income Total

Other Comprehensive Income (Loss) Total

Stockholders’

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27,585,669 $ 28 $ 623,450 $ ( 220,905 ) $ ( 111 ) $ 402,462

Stock-based compensation expense — — 13,179 — — 13,179

Exercise of common stock options 1,779 — 8 — — 8

Issuance of common stock from vested restricted stock units and payment of employees’ taxes 123,576 — ( 615 ) — — ( 615 )

Net unrealized loss on marketable investment securities — — — — ( 61 ) ( 61 )

Net income — — — 8,920 — 8,920

BALANCE, JUNE 30, 2024

27,711,024 $ 28 $ 636,022 $ ( 211,985 ) $ ( 172 ) $ 423,893

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Other Comprehensive Income (Loss) Total

Stockholders’

Shares Amount

BALANCE, JANUARY 1, 2025

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28,844,937 $ 29 $ 666,120 $ ( 225,974 ) $ 131 $ 440,306

Stock-based compensation expense — — 11,208 — — 11,208

Exercise of common stock options 10,664 — 19 — — 19

Issuance of common stock from vested restricted stock units and payment of employees’ taxes 125,550 — ( 588 ) — — ( 588 )

Net unrealized loss on marketable investment securities — — — — ( 92 ) ( 92 )

Net income — — — 4,523 — 4,523

BALANCE, JUNE 30, 2025

28,981,151 $ 29 $ 676,759 $ ( 221,451 ) $ 39 $ 455,376

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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(in thousands)

Three Months Ended

Six Months Ended

OPERATING ACTIVITIES

Net loss $ ( 25,848 ) $ ( 2,534 )

Adjustments to reconcile net loss to net cash used in operating activities:

Net (loss) income $ ( 21,325 ) $ 6,386

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization 33,178 6,688

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Other accrued and current liabilities 474 68

Net cash used in operating activities ( 6,036 ) ( 6,835 )

Net cash provided by operating activities 14,785 17,163

INVESTING ACTIVITIES

2 unchanged sentences

Purchases of debt securities classified as held-to-maturity ( 5,569 ) —

Asset acquisition, net of cash and cash equivalents acquired ( 18,726 ) —

Purchases of property and equipment ( 14,003 ) ( 14,381 )

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Repayment of principal portion of finance lease liabilities ( 57 ) ( 47 )

Proceeds from lease incentives received 190 —

Proceeds from issuance of term debt — 10,000

Net cash (used in) provided by financing activities ( 1,452 ) 10,686

NET CHANGE IN CASH AND CASH EQUIVALENTS ( 30,020 ) ( 15,892 )

Beginning of period 119,709 98,841

End of period $ 89,689 $ 82,949

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

NET CHANGE IN CASH AND CASH EQUIVALENTS ( 37,476 ) ( 13,269 )

Beginning of period 119,709 98,841

End of period $ 82,233 $ 85,572

DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Asset acquisition, liability for contingent consideration $ 2,500 $ —

Accrued purchases of property and equipment $ 6,822 $ 2,148

Operating lease assets obtained in exchange for lease obligations $ 4,687 $ —

Decrease in operating lease assets with corresponding change in lease liabilities $ ( 104 ) $ ( 7 )

Finance lease assets obtained in exchange for lease obligations $ 119 $ 166

Property and equipment acquired with tenant improvement allowance $ 7,224 $ —

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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All intercompany accounts and transactions have been eliminated in consolidation.

We have a history of recurring net losses and negative cash flows and as of March 31, 2025, we had an accumulated deficit of $ 226.0 million.

We believe our $ 89.7 million of cash and cash equivalents and $ 185.5 million of marketable investment securities as of March 31, 2025, and anticipated revenue from our test reports, will be sufficient to meet our cash requirements through at least the 12-month period following the date that these unaudited condensed consolidated financial statements were issued.

We have a history of recurring net losses and negative cash flows and as of June 30, 2025, we had an accumulated deficit of $ 221.5 million.

We believe our $ 82.2 million of cash and cash equivalents and $ 193.7 million of marketable investment securities as of June 30, 2025, and anticipated revenue from our test reports, will be sufficient to meet our cash requirements through at least the 12-month period following the date that these unaudited condensed consolidated financial statements were issued.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of March 31, 2025;

the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of stockholders’ equity, each for the three months ended March 31, 2025 and 2024;

and the condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our consolidated financial position as of March 31, 2025, the results of our consolidated operations for the three months ended March 31, 2025 and 2024 and our consolidated cash flows for the three months ended March 31, 2025 and 2024.

The financial data and other information disclosed in these notes related to the three months ended March 31, 2025 and 2024 are also unaudited.

The results for the three months ended March 31, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The accompanying condensed consolidated balance sheet as of June 30, 2025;

the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of stockholders’ equity, each for the three and six months ended June 30, 2025 and 2024;

and the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our consolidated financial position as of June 30, 2025, the results of our consolidated operations for the three and six months ended June 30, 2025 and 2024 and our consolidated cash flows for the six months ended June 30, 2025 and 2024.

The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2025 and 2024 are also unaudited.

The results for the three and six months ended June 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

The balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date.

Certain disclosures have been condensed or omitted from the unaudited interim consolidated financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on February 27, 2025 (the “2024 10-K”).

Use of Estimates

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets and the valuation of other contingent liabilities.

Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets, the valuation of contingent consideration, and other contingent liabilities.

We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events.

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We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive loss within total stockholders’ equity, net of any related deferred income tax effects, on our condensed consolidated balance sheets.

Long-term debt securities that are classified as held-to-maturity (“HTM”) are reported at amortized cost with ASC 320.

Debt securities that are classified as held-to-maturity (“HTM”) are reported at amortized cost with ASC 320.

Premiums or discounts from par value are amortized to interest income over the life of the underlying investment and are included in interest income in the consolidated statements of operations.

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See Notes 5 and 11 for further details.

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.

Under this guidance, we apply a two-step model.

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.

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.

If so, the transaction is treated as a business combination.

Otherwise, it is treated as an asset acquisition.

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.

If the total consideration transferred is less than the aggregate fair value of the net assets acquired (i.e., a bargain purchase), the difference is not recognized as a gain.

Instead, the difference is allocated to the cost of the acquired assets on a relative fair value basis.

Business combinations 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.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contingent Consideration

Under the terms of business combinations or asset acquisitions, we may be required to pay additional consideration if specified future events occur or certain conditions are met.

In May 2025, we acquired Capsulomics, Inc., d/b/a Previse (“Capsulomics”), which was recorded as an asset acquisition, and agreed to pay additional consideration of up to $ 2.5 million in cash based on the achievement of certain commercial milestones (the “Earnout Payments”).

We account for the contingent consideration as a liability in accordance with ASC 450-20, Loss Contingencies (“ASC 450-20”) when it is both probable and reasonably estimable.

In accordance with ASC 450-20, we recorded the contingent consideration at the amount required to settle the respective obligation, and subsequent changes are recognized as adjustments to the cost basis of the acquired assets.

These changes are allocated to the acquired assets based on their relative fair values as of the date of acquisition.

Contingent consideration is classified as current or noncurrent in our condensed consolidated balance sheets based on the contractual timing of future settlement.

Revenue Recognition

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The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected.

2 unchanged sentences

Historically, our credit losses have not been significant.

The allowance for credit losses was zero as of March 31, 2025 and December 31, 2024.

The allowance for credit losses was zero as of June 30, 2025 and December 31, 2024.

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.

3 unchanged sentences

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.

Our leasehold improvements primarily relate to our office and laboratory facilities in Friendswood, Texas, Phoenix, Arizona and Pittsburgh, Pennsylvania, and are generally being depreciated through the end of the lease terms in 2025 and 2034, respectively.

Our leasehold improvements primarily relate to our office and laboratory facilities located in Friendswood, Texas, Phoenix, Arizona and Pittsburgh, Pennsylvania, and are generally depreciated over the remaining lease terms, which end in 2025, 2034 and 2033, respectively.

Maintenance and repairs are charged to expense as incurred, and material improvements are capitalized.

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Goodwill is not amortized, but is tested for impairment.

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.

We test goodwill for

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

impairment in the fourth quarter of each fiscal year and when events, or changes in circumstances, indicate that it may be impaired.

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.

Goodwill is tested for impairment at the reporting until level where goodwill is held.

Goodwill is tested for impairment at the reporting unit level where goodwill is held.

Testing begins with completion of an optional qualitative assessment.

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We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets.

As of March 31, 2025 and December 31, 2024, we accrued approximately $ 7.6 million and $ 23.3 million, respectively, for liabilities associated with these bonus plans.

As of June 30, 2025 and December 31, 2024, we accrued approximately $ 15.0 million and $ 23.3 million, respectively, for liabilities associated with these bonus plans.

These amounts are classified as current or noncurrent accrued liabilities in the unaudited condensed consolidated balance sheets based on the expected timing of payment.

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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.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

options and RSUs, the requisite service period is generally the award’s vesting period (typically four years ).

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.

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Share-based awards falling into the scope of the 2023 Retirement Policy are accounted for as a modification of existing awards under ASC Topic 718, Compensation – Stock Compensation .

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.

The modifications do not result in the recognition of incremental compensation cost;

however, they 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.

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.

Comprehensive loss is made up of net loss plus net unrealized loss on marketable investment securities, which is our only other item of other comprehensive loss.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.

Comprehensive income (loss) is made up of net income (loss) plus net unrealized loss on marketable investment securities, which is our only other item of other comprehensive income (loss).

Accounting Pronouncements Yet to be Adopted

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The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024.

ASU 2023-09 is effective for the Company

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

prospectively to all annual periods beginning after December 15, 2024.

Early adoption is permitted.

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All of our revenues from contracts with customers are associated with the provision of testing services.

Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma and our DecisionDx®-SCC test for cutaneous squamous cell carcinoma (“SCC”).

We also provide a test for patients diagnosed with Barrett’s esophagus (“BE”), the TissueCypher® test, a test for patients with suspicious pigmented lesions, MyPath® Melanoma, a test for uveal melanoma (“UM”), DecisionDx®-UM, and a pharmacogenomics (“PGx”) testing service focused on mental health, IDgenetix®.

Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma and our DecisionDx®-SCC test for cutaneous squamous cell carcinoma.

We also provide a test for patients diagnosed with Barrett’s esophagus, the TissueCypher® test, a test for patients with suspicious pigmented lesions, MyPath® Melanoma, a test for uveal melanoma, DecisionDx®-UM, and a pharmacogenomics testing service focused on mental health, IDgenetix®.

Once we satisfy our performance obligations and bill for the service, the timing of the collection of payments may vary based on the payment practices of the third-party payor and the existence of contractually established reimbursement rates.

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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.

We may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan.

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.

The Medicare claims that are covered by Medicare are generally paid at a rate established on Medicare’s Clinical Laboratory Fee Schedule or by the respective Medicare contractor within 30 days from receipt.

Medicare claims that were either submitted to Medicare prior to the local coverage determination (“LCD”) or other coverage commencement date or are not covered but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act are generally appealed and may ultimately be paid at the first (termed ‘‘redetermination’’), second (termed ‘‘reconsideration’’) or third level of appeal ( de novo hearing with an Administrative Law Judge).

Medicare claims that were either submitted to Medicare prior to the local coverage determination or other coverage commencement date or are not covered but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act are generally appealed and may ultimately be paid at the first (termed ‘‘redetermination’’), second (termed ‘‘reconsideration’’) or third level of appeal ( de novo hearing with an Administrative Law Judge).

A successful appeal at any of these levels may result in prompt payment.

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Accordingly, in such situations revenues are recognized on the basis of actual cash collections.

Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.

Variable consideration for Medicare claims that are

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.

Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues.

Included in revenues for the three months ended March 31, 2025 and 2024 were $ 0.8 million of net positive revenue adjustments and $ 1.7 million of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.

Included in revenues for the three months ended June 30, 2025 and 2024 were less than $ 0.1 million of net positive revenue adjustments and $ 0.4 million of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.

Included in revenues for the six months ended June 30, 2025 and 2024 were $ 2.0 million of net negative revenue adjustments and $ 1.0 million of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration.

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.

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Any incremental costs to obtain contracts are recorded as selling, general and administrative expenses as incurred due to the short duration of our contracts.

Contract balances consisted solely of accounts receivable (both current and noncurrent) as of March 31, 2025 and December 31, 2024.

Contract balances consisted solely of accounts receivable (both current and noncurrent) as of June 30, 2025 and December 31, 2024.

Disaggregation of Revenues

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Dermatologic (1)

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Percentage of Revenues

Three Months Ended

March 31, Percentage of

Six Months Ended

June 30, Percentage of

Accounts Receivable

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(noncurrent) as of

2025 2024 March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024

2025 2024 June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024

Medicare 47 % 48 % 16 % 18 % * *

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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.

Loss Per Share

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.

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.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period.

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.

Contingently issuable PSU awards are included in the computation of diluted loss per share when the applicable performance criteria would be met and the common shares would be issuable if the end of the reporting period were the end of the contingency period.

Contingently issuable PSU awards are included in the computation of diluted earnings (loss) per share when the applicable performance criteria would be met and the common shares would be issuable if the end of the reporting period were the end of the contingency period.

However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive.

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.

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 three months ended March 31, 2025 and 2024 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands):

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table shows the computation of basic and diluted earnings (loss) per share for the following three and six months ended June 30, 2025 and 2024 (in thousands, except per share data):

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net income (loss) $ 4,523 $ 8,920 $ ( 21,325 ) $ 6,386

Weighted-average common shares outstanding, basic 28,914 27,646 28,763 27,566

Assumed exercise of stock options 361 440 — 441

Assumed vesting of RSUs 186 546 — 427

Assumed vesting of PSUs 84 98 — 98

Assumed issuance of shares under the ESPP — 8 — 10

Weighted-average common shares outstanding, diluted 29,545 28,738 28,763 28,542

Earnings (loss) per share:

Basic $ 0.16 $ 0.32 $ ( 0.74 ) $ 0.23

Diluted $ 0.15 $ 0.31 $ ( 0.74 ) $ 0.22

Due to the Company reporting a net loss attributable to common stockholders for the six months ended June 30, 2025, all potentially dilutive securities are antidilutive and are excluded from the computations of diluted loss per share.

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 three and six months ended June 30, 2025 and 2024 because to do so would be antidilutive.

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 earnings per common share until such time that it is probable that actual performance will be above or below target (in thousands):

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Stock options 2,466 2,487 2,965 2,493

RSUs and PSUs 2,958 892 4,053 877

ESPP 123 216 150 233

Total 5,547 3,595 7,168 3,603

3 unchanged sentences

Marketable investment securities consisted of the following (in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current marketable investment securities:

1 unchanged sentence

Debt securities - AFS 184,805 169,866

Total current marketable investment securities $ 185,462 $ 173,421

Long-term marketable investment securities:

Debt securities - HTM (1)

Total current marketable investment securities $ 193,697 $ 173,421

(1) We held no debt securities - HTM as of December 31, 2024.

Trading securities

We recognized $ 1.4 million in losses as of March 31, 2025 all of which were unrealized on our trading securities for three months ended March 31, 2025.

We recognized no gains or losses for the three months ended March 31, 2024.

We recognized unrealized gains of $ 1.2 million and unrealized losses of $ 0.2 million in our trading securities for the three and six months ended June 30, 2025, respectively.

No gains or losses were recognized for the three and six months ended June 30, 2024, as we did not hold any trading securities during those periods.

Debt securities

The following tables present our debt securities (in thousands):

March 31, 2025

June 30, 2025

Amortized Cost Unrealized Estimated Fair Value

7 unchanged sentences

Total debt securities $ 169,636 $ 244 $ ( 14 ) $ 169,866

(1) We held no debt securities - HTM as of December 31, 2024.

government securities includes both AFS and HTM securities.

1 unchanged sentence

We classify all AFS investments as current assets, as these are readily available for use in current operations.

We classify our HTM investments as noncurrent assets, as we have the positive intent and ability to hold these investments to maturity, and all such maturities extend beyond one year from the balance sheet date.

We classify our HTM investments as current assets, as we have the positive intent and ability to hold these investments to maturity, and all such maturities are less than one year from the balance sheet date.

We evaluated our U.S.

government securities under the AFS and HTM impairment model guidance, respectively, and determined our investment portfolio is comprised of low-risk, investment grade securities.

As of March 31, 2025, unrealized losses on our AFS U.S.

As of June 30, 2025, unrealized losses on our AFS and HTM U.S.

government securities are not attributed to credit risk.

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.

The allowance for credit losses was zero as of March 31, 2025 and December 31, 2024.

As of March 31, 2025, all of our AFS debt securities had contractual maturities of one year or less.

The allowance for credit losses was zero as of June 30, 2025 and December 31, 2024.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

There were no realized gains or losses on sales of debt securities for the three months ended March 31, 2025 and 2024.

No credit-related or noncredit-related impairment losses were recorded for the three months ended March 31, 2025 and 2024.

Accrued interest receivable for our AFS U.S.

There were no realized gains or losses on sales of debt securities for the three and six months ended June 30, 2025 and 2024.

No credit-related or noncredit-related impairment losses were recorded for the three and six months ended June 30, 2025 and 2024.

Accrued interest receivable for our AFS and HTM U.S.

government securities is included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets.

The accrued interest receivable balance for our AFS U.S.

government securities was $ 0.6 million as of both March 31, 2025 and December 31, 2024.

Accrued interest receivable for our HTM U.S.

government securities is included in other assets — long-term in our unaudited condensed consolidated balance sheets.

As of March 31, 2025, the accrued interest receivable balance for our HTM U.S.

government securities was immaterial.

No amounts were accrued as of December 31, 2024 as none were considered HTM.

As of June 30, 2025 and December 31, 2024, the accrued interest receivable related to AFS securities was $ 1.0 million and $ 0.6 million, respectively.

The balance related to HTM securities was immaterial as of June 30, 2025, and no amounts were accrued as of December 31, 2024, as no securities were classified as HTM at that time.

Additional information relating to the fair value of marketable investment securities can be found in Note 11.

1 unchanged sentence

Property and equipment, net consisted of the following (in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Land $ 7,245 $ 7,245

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Cost of sales (exclusive of amortization of acquired intangible assets) $ 909 $ 637 $ 1,812 $ 1,292

3 unchanged sentences

Goodwill and Other Intangible Assets, Net

We had a single reporting unit where all goodwill was allocated for as of March 31, 2025 and December 31, 2024.

The balance of our goodwill was $ 10.7 million as of March 31, 2025 and December 31, 2024.

There were no accumulated impairments of goodwill as of March 31, 2025 or December 31, 2024.

We had a single reportable segment consisting of a single operating segment where the operating segment and the single reporting unit where the same as of March 31, 2025 and December 31, 2024.

We had a single reporting unit where all goodwill was allocated for as of June 30, 2025 and December 31, 2024.

The balance of our goodwill was $ 10.7 million as of June 30, 2025 and December 31, 2024.

There were no accumulated impairments of goodwill as of June 30, 2025 or December 31, 2024.

We had a single reportable segment consisting of a single operating segment where the operating segment and the single reporting unit where the same as of June 30, 2025 and December 31, 2024.

See Note 15 for additional information on our reportable segment.

3 unchanged sentences

Our other intangible assets, net consisted of the following (in thousands):

March 31, 2025

June 30, 2025

Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years)

9 unchanged sentences

As a result of this decision, we further revised the estimated useful life of the asset and determined that the intangible asset should be fully amortized as of March 31, 2025.

This change resulted in an acceleration of amortization expense of approximately $ 20.1 million during the three months ended March 31, 2025.

Amortization expense of intangible assets was $ 28.3 million and $ 2.2 million for the three months ended March 31, 2025 and 2024, respectively.

This change resulted in an acceleration of amortization expense of approximately $ 20.1 million.

In connection with the acquisition of Capsulomics, and in accordance with ASC 805, we determined that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset;

therefore, the transaction was accounted for as an asset acquisition.

The acquired intangible asset consists of developed technology and is valued at $ 28.2 million with an estimated useful life of 12 years and is being amortized on a straight-line basis.

Amortization expense of intangible assets was $ 2.0 million and $ 30.3 million for the three and six months ended June 30, 2025, respectively, and $ 2.2 million and $ 4.5 million for the three and six months ended June 30, 2024 respectively.

Other Accrued and Current Liabilities

Other accrued and current liabilities consisted of the following (in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Clinical studies $ 2,204 $ 2,580

1 unchanged sentence

Accrued taxes 1,193 1,076

ESPP Contributions 969 1,225

Other 869 774

Total $ 8,221 $ 7,993

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-Term Debt

Our long-term debt is presented in the table below (in thousands):

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Term debt $ 10,200 $ 10,200

3 unchanged sentences

Total long-term debt $ 8,096 $ 9,745

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future maturities of principal amounts on long-term debt as of March 31, 2025 were as follows (in thousands):

Future maturities of principal amounts on long-term debt as of June 30, 2025 were as follows (in thousands):

Years Ending December 31,

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2024 Loan and Security Agreement

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’’).

The 2024 LSA provides for (i) on the Closing Date, $ 10.0 million aggregate principal amount of term loans (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 (discussed in the ‘‘2024 Credit Line’’ section below) at our option.

On March 26, 2024 (the ‘‘Closing Date’’), we entered into a Loan and Security Agreement, as amended in April 2025 (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’’).

The 2024 LSA provides for (i) on the Closing Date, $ 10.0 million aggregate principal amount of term loans (discussed in the ‘‘2024 Term Loan’’ section below), and (ii) from the Closing Date until September 30, 2025, an additional line of credit of $ 25.0 million with the same interest rate and maturity as the term debt available (discussed in the ‘‘2024 Credit Line’’ section below) at our option.

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.

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Should we seek to amend the terms of the 2024 LSA, the consent of the Lender would be required.

As of March 31, 2025, we were in compliance with all of the covenants.

As of June 30, 2025, we were in compliance with all of the covenants.

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.

2 unchanged sentences

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.

On April 4, 2025, the Company entered into a Consent and First Amendment (the “Amendment”) with the Lender.

The Amendment modified certain terms of the 2024 LSA including the extension of the draw period from March 31, 2025 to September 30, 2025 for our line of credit.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2024 Term Loan

2 unchanged sentences

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.

As of March 31, 2025, no payment on principal has been made.

As of March 31, 2025, the weighted average effective interest rate for all outstanding debt under the 2024 Term Loan was 8.19 %.

As of June 30, 2025, no payment on principal has been made.

As of June 30, 2025, the weighted average effective interest rate for all outstanding debt under the 2024 Term Loan was 8.19 %.

2024 Credit Line

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.

We have a $ 25.0 million line of credit under the terms and provisions of the 2024 LSA and the Amendment, from the Closing Date through September 30, 2025.

Amounts repaid under the 2024 Credit Line may not be reborrowed.

As of March 31, 2025, no draws had been made on the line of credit.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2025, no draws had been made on the line of credit.

Interest Expense on Long-Term Debt

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Interest expense on long term debt $ 203 $ 228 $ 405 $ 241

1 unchanged sentence

Total $ 9 $ 216 $ 17 $ 229

Scottsdale Lease

On May 14, 2025, we entered into a lease agreement (the “Commencement Date”) with Perimeter Gateway Portfolio, LLC (the “Lessor”) for the lease of approximately 55,573 square feet of office and laboratory space in Scottsdale, Arizona (the “Scottsdale Lease”).

The Scottsdale Lease has a term of 143 months term that will expire in April 2037, and provides for right of refusal to lease any additional adjacent space that would/may become available in the future (the “ROFR Space”).

The Scottsdale Lease provides us two optional five-year term extensions, and a one -time option to terminate the lease on the last day of the 96 th month following the Commencement Date, subject to certain conditions, in exchange for payment of an early termination fee equal to the following:

the unamortized balance of the commissions paid to Lessor’s broker and our broker, plus the unamortized balance of the hard and soft costs incurred by the Lessor in connection with the tenant improvement allowance.

The Scottsdale Lease contains provisions for $ 7.2 million in lease incentives in form of Lessor paid improvements.

Rent for the first twelve months is abated, in the amount of $ 1.8 million, and any amount that is unamortized becomes payable if we default on the lease.

Fair Value Measurements

7 unchanged sentences

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values.

The use of different assumptions and/or estimation methodologies may have a material effect on estimated

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

The tables below provide 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 March 31, 2025 and December 31, 2024 (in thousands):

As of March 31, 2025

The tables below provide 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 June 30, 2025 and December 31, 2024 (in thousands):

As of June 30, 2025

Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs

9 unchanged sentences

$ — $ 10,040 $ — $ 10,040

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2024

27 unchanged sentences

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.

Our insurance and indemnities

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

may not cover all claims that may be asserted against us.

We are unable to predict the outcome and are unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome.

Stock Incentive Plans and Stock-Based Compensation

Equity Incentive Plans

Equity Incentive Plan

On July 24, 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”).

1 unchanged sentence

Under this provision, effective January 1, 2025, an additional 1,424,159 shares became available under the 2019 Plan.

As of March 31, 2025, there were 1,064,380 shares remained available for grant under the 2019 Plan.

As of June 30, 2025, there were 1,002,126 shares remained available for grant under the 2019 Plan.

Inducement Plan

1 unchanged sentence

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.

As of March 31, 2025, there were 203,191 shares available for grant under the Inducement Plan.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2025, there were 88,640 shares available for grant under the Inducement Plan.

Stock Options

Stock option activity under our stock plans for the three months ended March 31, 2025 is set forth below:

Stock option activity under our stock plans for the six months ended June 30, 2025 is set forth below:

Weighted-Average

8 unchanged sentences

Forfeited/Cancelled ( 60,225 ) $ 43.98

Balance as of March 31, 2025 2,966,124 $ 36.25 5.3 $ 7,561

Exercisable at March 31, 2025

Balance as of June 30, 2025 2,912,543 $ 36.27 5.1 $ 7,583

Exercisable at June 30, 2025

2,834,588 $ 36.17 5.0 $ 7,583

Restricted Stock Units

The following table summarizes our RSU activity for the three months ended March 31, 2025:

The following table summarizes our RSU activity for the six months ended June 30, 2025:

Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value

4 unchanged sentences

Forfeited/Cancelled ( 159,905 ) $ 23.48

Balance as of March 31, 2025

Balance as of June 30, 2025

4,024,320 $ 22.75

(1) The aggregate number of shares withheld upon vesting for employee tax obligations was 111,775 for the three months ended March 31, 2025.

(1) The aggregate number of shares withheld upon vesting for employee tax obligations was 142,637 for the six months ended June 30, 2025.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Performance-Based Restricted Stock Units

The following table summarizes our PSU activity for the three months ended March 31, 2025:

The following table summarizes our PSU activity for the six months ended June 30, 2025:

Performance-Based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited/Cancelled — $ —

Balance as of March 31, 2025

Balance as of June 30, 2025

448,159 $ 22.05

1 unchanged sentence

The ESPP provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 284,831 shares becoming available under the ESPP effective January 1, 2025.

During the three months ended March 31, 2025, we issued 103,441 shares of common stock pursuant to scheduled purchases under the ESPP.

As of March 31, 2025, 1,228,070 shares remained available for issuance under the ESPP.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

During the six months ended June 30, 2025, we issued 103,441 shares of common stock pursuant to scheduled purchases under the ESPP.

As of June 30, 2025, 1,228,070 shares remained available for issuance under the ESPP.

Determining Fair Value - Summary of Assumptions

1 unchanged sentence

The following table sets forth assumptions used under the ESPP:

Three Months Ended

Six Months Ended

Average expected term (years) 1.2 1.3

5 unchanged sentences

Dividend yield — % — %

There were no stock options granted for the three months ended March 31, 2025 and 2024.

The weighted-average grant date fair value of the purchase rights granted under the ESPP was $ 9.43 and $ 11.17 per share, respectively.

There were no stock options granted for the six months ended June 30, 2025 and 2024.

For the six months ended June 30, 2025 and 2024, the weighted-average grant date fair value of the purchase rights granted under the ESPP was $ 9.43 and $ 11.17 per share, respectively.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-Based Compensation Expense

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Cost of sales (exclusive of amortization of acquired intangible assets) $ 1,422 $ 1,401 $ 2,878 $ 2,715

4 unchanged sentences

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.

Included in total stock-based compensation expense for the three months ended March 31, 2025, and 2024 is $ 0.3 million and $ 0.2 million, respectively, from the accelerated recognition of expense for modifications of awards falling in scope of the Retirement Policy.

As of March 31, 2025, the total unrecognized stock-based compensation cost related to outstanding awards was $ 88.7 million, which is expected to be recognized over a weighted-average period of 2.6 years.

Pursuant to the Retirement Policy, we accelerated the recognition of compensation expense of $ 0.2 million and $ 0.4 million during the three months ended June 30, 2025, and 2024, respectively, and accelerated the recognition of compensation expense of $ 0.5 million and $ 0.6 million for the six months ended June 30, 2025 and 2024, respectively.

As of June 30, 2025, the total unrecognized stock-based compensation cost related to outstanding awards was $ 80.5 million, which is expected to be recognized over a weighted-average period of 2.5 years.

The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur.

Our effective income tax rate was immaterial for the three months ended March 31, 2025, and was 11.0 % for the three months ended March 31, 2024.

The effective rate for the three months ended March 31, 2025 and 2024 differed from our federal statutory rate of 21% was primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

During the three and six months ended June 30, 2025, we recognized income tax benefit of $ 4.7 million and $ 5.1 million, respectively, primarily from the reduction of the valuation allowance on deferred tax assets, recorded as a discrete benefit in the quarter ended June 30, 2025.

This release was primarily driven by the acquisition of Capsulomics, which resulted in deferred tax liabilities related to acquired intangible assets.

The deferred tax assets previously reserved are now expected to be realizable against those liabilities.

This release is non‑recurring and materially impacted our effective tax rate for the period.

Because this benefit is nonrecurring and not reflective of ongoing operations, the effective tax rate for the period is not meaningful.

The effective rate for the three and six months ended June 30, 2025 differed from our federal statutory rate of 21% primarily due to the tax impact from the valuation allowance for current year activity including the acquisition of Capsulomics, state income taxes and the non-deductibility of other permanent items.

Our effective income tax rate was ( 13.1 )% and ( 18.3 )% for the three and six months ended June 30, 2024.

The effective rate for the three and six months ended June 30, 2024 differed from our federal statutory rate of 21% primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items.

Segment and Related Information

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Net revenues from external customers (1)

7 unchanged sentences

Other segment items 5,948 7,586 42,963 15,630

Segment loss $ ( 25,848 ) $ ( 2,534 )

Segment income (loss) $ 4,523 $ 8,920 $ ( 21,325 ) $ 6,386

(1) For information on disaggregation of segment revenue by type and information about payor concentration, see Note 3.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

Interest income $ 2,944 $ 3,144 $ 6,043 $ 6,140

1 unchanged sentence

Depreciation and amortization $ 3,414 $ 3,348 $ 33,178 $ 6,688

Income tax (benefit) expense ( 423 ) 45

Income tax benefit $ ( 4,666 ) $ ( 1,034 ) $ ( 5,089 ) $ ( 989 )

Stock-based compensation expense $ 11,208 $ 13,179 $ 22,387 $ 25,854

Changes in fair value of trading securities $ 1,185 $ — $ ( 240 ) $ —

Total assets for our reportable segment were located in the United States and were $ 501.7 million and $ 531.2 million as of March 31, 2025 and December 31, 2024, respectively.

Expenditures for additions to long-lived assets were $ 5.7 million and $ 8.6 million for the three months ended March 31, 2025 and 2024, respectively.

Subsequent Events

On April 4, 2025, the Company and its wholly owned subsidiary, Castle Narnia Way Real Estate Holding 1, LLC, entered into a Consent and First Amendment (the “Amendment”) with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company.

The Amendment modified certain terms of the 2024 LSA, dated March 26, 2024, including the extension of the draw period from March 31, 2025 to September 30, 2025 for our line of credit.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On April 24, 2025, the Novitas LCD, Genetic Testing for Oncology:

Specific Tests, that includes DecisionDx-SCC as noncovered, became effective.

The final LCD was based on a proposed determination initially published in July 2023.

Following a public comment and review process, the LCD recommended non-coverage for the DecisionDx-SCC test.

Total assets for our reportable segment were located in the United States and were $ 544.7 million and $ 531.2 million as of June 30, 2025 and December 31, 2024, respectively.

Expenditures for additions to long-lived assets were $ 12.9 million and $ 6.7 million for the three months ended June 30, 2025 and 2024, respectively, $ 18.6 million and $ 15.3 million for the six months ended June 30, 2025, and 2024, 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.

What changed 10-Q

Item 1. Financial Statements