What changed in this filing

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Item 1. Financial Statements

2025-11-03 compared with 2025-08-04 · 269 added, 198 removed, 599 unchanged (44% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

ASSETS (unaudited)

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Preferred stock, $ 0.001 par value per share;

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

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

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

Common stock, $ 0.001 par value per share;

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

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

29,161,863 and 28,483,195 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 688,729 655,703

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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Interest income 2,833 3,404 8,876 9,544

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

Changes in fair value of equity securities 3,561 — 3,321 —

Interest expense ( 24 ) ( 201 ) ( 62 ) ( 485 )

Other expense 48 — 48 —

(Loss) income before income taxes ( 386 ) 8,282 ( 26,800 ) 13,679

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

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

Income tax expense (benefit) 115 6,013 ( 4,974 ) 5,024

Net (loss) income $ ( 501 ) $ 2,269 $ ( 21,826 ) $ 8,655

Earnings (loss) per share:

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CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

Net (loss) income $ ( 501 ) $ 2,269 $ ( 21,826 ) $ 8,655

Other comprehensive income:

Net unrealized gain on marketable investment securities 201 645 10 337

Comprehensive (loss) income $ ( 300 ) $ 2,914 $ ( 21,816 ) $ 8,992

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

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

Stock-based compensation expense — — 13,027 — — 13,027

Exercise of common stock options 90,378 — 1,571 — — 1,571

Issuance of common stock from vested restricted stock units, performance stock units and payment of employees’ taxes 117,959 — ( 1,294 ) — — ( 1,294 )

Issuance of common stock under the employee stock purchase plan 56,447 — 944 — — 944

Net unrealized gain on marketable investment securities — — — — 645 645

Net income — — — 2,269 — 2,269

BALANCE, SEPTEMBER 30, 2024

27,975,808 $ 28 $ 650,270 $ ( 209,716 ) $ 473 $ 441,055

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

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

Stock-based compensation expense — — 12,100 — — 12,100

Exercise of common stock options 4,000 — 77 — — 77

Issuance of common stock from vested restricted stock units, performance stock units and payment of employees’ taxes 119,255 — ( 1,185 ) — — ( 1,185 )

Issuance of common stock under the employee stock purchase plan 57,457 — 978 — — 978

Net unrealized gain on marketable investment securities — — — — 201 201

Net loss — — — ( 501 ) — ( 501 )

BALANCE, SEPTEMBER 30, 2025

29,161,863 $ 29 $ 688,729 $ ( 221,952 ) $ 240 $ 467,046

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

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(in thousands)

Six Months Ended

Nine Months Ended

September 30,

OPERATING ACTIVITIES

Net (loss) income $ ( 21,826 ) $ 8,655

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

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 36,994 10,229

Stock-based compensation expense 34,487 38,881

Change in fair value of trading securities 240 —

Change in fair value of equity securities ( 3,321 ) —

Deferred income taxes ( 5,321 ) 3,708

Accretion of discounts on marketable investment securities ( 3,511 ) ( 5,072 )

Other 282 208

Change in operating assets and liabilities:

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Net cash (used in) provided by financing activities ( 2,371 ) 11,524

NET CHANGE IN CASH AND CASH EQUIVALENTS ( 34,153 ) ( 3,882 )

Beginning of period 119,709 98,841

End of period $ 85,556 $ 94,959

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

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(in thousands)

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

Nine Months Ended

September 30,

DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

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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 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.

We have a history of recurring net losses and negative cash flows and as of September 30, 2025, we had an accumulated deficit of $ 222.0 million.

We believe our $ 85.6 million of cash and cash equivalents and $ 202.0 million of marketable investment securities as of September 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 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 accompanying condensed consolidated balance sheet as of September 30, 2025;

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

and the condensed consolidated statements of cash flows for the nine months ended September 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 September 30, 2025, the results of our consolidated operations for the three and nine months ended September 30, 2025 and 2024 and our consolidated cash flows for the nine months ended September 30, 2025 and 2024.

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

The results for the three and nine months ended September 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.

Certain disclosures have been condensed or omitted from the unaudited condensed 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 on February 27, 2025.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

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.

The preparation of condensed consolidated financial statements in conformity with U.S.

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 condensed 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, the valuation of contingent consideration, and other contingent liabilities.

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Debt securities that are classified as available-for-sale (“AFS”) are recorded at fair value in accordance with ASC 320.

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.

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.

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

Debt securities that are classified as held-to-maturity (“HTM”) are reported at amortized cost in accordance 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 condensed consolidated statements of operations.

Realized gains and losses on AFS and HTM debt securities, if any, are calculated at the individual security level and included in interest income in the condensed consolidated statements of operations.

Impairments of AFS or HTM debt securities, if any, are recorded in our unaudited condensed consolidated statements of operations.

Impairments of AFS or HTM debt securities, if any, are recorded in the condensed consolidated statements of operations.

See Notes 5 and 11 for further details.

Our equity securities consist of investments in shares of common stock which are listed and traded on the Nasdaq Global Market.

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.

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.

Our equity securities consist of investments in shares of common stock which are listed and traded on the Nasdaq Global Market and certain foreign exchanges.

All equity securities are recognized in accordance with ASC Topic 321, Investments-Equity Securities (“ASC 321”) and reported at their readily determinable fair values based on quoted market prices where changes in fair value are included in changes in fair value of equity securities in the condensed consolidated statements of operations.

For investments denominated in a foreign currency, the fair value is remeasured into U.S.

dollars using exchange rates in effect at each balance sheet date in accordance with ASC Topic 830, Foreign Currency Matters .

As a result, changes in fair value include the effects of both market price movements and foreign currency exchange rate fluctuations.

All changes in a marketable security’s fair value are reported in earnings as they occur, and the sale of our equity securities does not necessarily give rise to a significant gain or loss.

Investments in equity securities are classified as either current or long-term depending upon management’s intentions.

We updated our terminology to refer to these investments as equity securities rather than trading securities to align with the terminology in ASC 321.

See Notes 5 and 11 for further details.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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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

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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.

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

Revenue Recognition

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See Note 3 for further details.

Collaborative Arrangements

We assess whether our licensing and other agreements are collaborative arrangements based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards.

For arrangements that we determine are collaborations, we identify each unit of account and then determine whether a customer relationship exists for that unit of account.

If we determine that a performance obligation within the collaborative arrangement is with a customer, we apply ASC 606.

If a portion of a distinct bundle of goods or services within the collaborative arrangement is not with a customer, we apply recognition and measurement based on an analogy to authoritative accounting literature or, if there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election.

To the extent the arrangement is within the scope of ASC Topic 808, Collaborative Arrangements (“ASC 808”), we assess whether aspects of the arrangement are within the scope of other accounting literature.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In June 2025, we entered into a Collaboration and License Agreement with SciBase Holding AB (“SciBase”).

Following approval under the Swedish Screening of Foreign Direct Investments Act in the third quarter of 2025, subsequent to approval, we completed our investment in SciBase.

The agreement aims to jointly develop diagnostic tests for dermatologic diseases, initially focused on atopic dermatitis, by combining SciBase’s Electrical Impedance Spectroscopy technology with our diagnostic and development expertise.

Under the arrangement, we hold development and commercialization rights in North America, while SciBase retains rights in certain other territories.

SciBase is entitled to royalties on our product sales, a mark-up on product sales to us, and a milestone payment upon achieving specified sales thresholds.

Development costs are shared;

however, SciBase deferred its initial clinical development costs for the initial indication and we will recover those costs through future royalty payments reductions.

We determined the agreement is a collaborative arrangement under ASC 808.

Certain elements of the arrangement, including license rights and sales-based royalty provisions, represent transactions with a customer and are therefore accounted for under ASC 606.

Other elements, such as shared development activities and cost reimbursements, are accounted for in accordance with ASC 808 and presented as reductions to research and development (“R&D”) expenses.

Accounts Receivable and Allowance for Credit Losses

We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets.

We classify accounts receivable balances that are expected to be paid more than one year from the condensed consolidated balance sheet date as noncurrent assets.

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.

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Historically, our credit losses have not been significant.

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

The allowance for credit losses was zero as of September 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.

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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.

When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the condensed consolidated balance sheet and any resulting gain or loss is reflected in the condensed consolidated statements of operations in the period realized.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination.

Goodwill is not amortized, but is tested for impairment.

We test goodwill for

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.

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.

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.

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

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Impairment of goodwill is the condition that exists when the carrying value exceeds its fair value.

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.

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 condensed consolidated statements of operations.

Accrued Compensation

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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 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.

As of September 30, 2025 and December 31, 2024, we accrued approximately $ 21.8 million and $ 23.3 million, respectively, for liabilities associated with these bonus plans.

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

Stock-Based Compensation

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Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements.

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 .

Stock-based awards falling into the scope of the Retirement Policy (as defined in Note 13) are accounted for as a modification of existing awards under ASC Topic 718, Compensation – Stock Compensation .

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

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Forfeitures are accounted for as they occur.

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).

Comprehensive (Loss) Income

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

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

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

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

Early adoption is permitted.

We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In November 2024, the FASB issued ASU No.

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We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments— Credit Losses (Topic 326):

Practical Expedient for Certain Current Receivables (“ASU 2025-05”), which provides a practical expedient for estimating expected credit losses on current accounts receivable and contract assets arising from transactions under ASC 606.

The practical expedient allows entities to assume that current conditions remain unchanged over the remaining life of the receivables.

ASU 2025-05 is effective for annual periods beginning after December 15, 2025, including interim periods within those annual periods.

Early adoption is permitted.

We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.

We 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.

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®.

Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma, our TissueCypher® test for patients diagnosed with Barrett’s esophagus, and our DecisionDx®-SCC test for cutaneous squamous cell carcinoma.

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

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the absence of Medicare coverage, contractually established reimbursements rates or other coverage, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions.

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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

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

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.

Included in revenues for the three months ended September 30, 2025 and 2024 were $ 2.5 million of net positive revenue adjustments and $ 0.6 million of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.

Included in revenues for the nine months ended September 30, 2025 and 2024 were $ 5.4 million and $ 1.3 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.

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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 June 30, 2025 and December 31, 2024.

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

Disaggregation of Revenues

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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(2) Consists of TissueCypher, DecisionDx-UM and IDgenetix.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We have presented disaggregated net revenues included in our single reportable segment in the table above.

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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.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Six Months Ended

June 30, Percentage of

Percentage of Revenues Percentage of

Accounts Receivable

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(noncurrent) as of

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

Nine Months Ended

September 30,

2025 2024 September 30, 2025 December 31, 2024 September 30, 2025 December 31, 2024

Medicare 45 % 47 % 18 % 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.

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.

(Loss) Earnings Per Share

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

Diluted (loss) earnings 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 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.

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):

Contingently issuable PSU awards are included in the computation of diluted (loss) earnings 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) earnings per share when their effect is antidilutive.

The following table shows the computation of basic and diluted (loss) earnings per share (in thousands, except per share data):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

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

Net (loss) income $ ( 501 ) $ 2,269 $ ( 21,826 ) $ 8,655

Weighted-average common shares outstanding, basic 29,073 27,840 28,868 27,659

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Diluted $ ( 0.02 ) $ 0.08 $ ( 0.76 ) $ 0.30

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.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Due to the Company reporting a net loss attributable to common stockholders for the three and nine months ended September 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 (loss) earnings per share for the three and nine months ended September 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

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

3 unchanged sentences

Total 7,369 3,059 7,171 3,226

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Marketable Investment Securities

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current marketable investment securities:

Trading securities $ 3,315 $ 3,555

Equity securities $ 8,907 $ 3,555

Debt securities - AFS 187,495 169,866

2 unchanged sentences

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

Trading securities

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.

Equity Securities

We recognized unrealized gains of $ 3.6 million and $ 3.3 million in our equity securities for the three and nine months ended September 30, 2025, respectively.

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

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Debt Securities

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

June 30, 2025

September 30, 2025

Amortized Cost Unrealized Estimated Fair Value

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

As of September 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 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 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.

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

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

No credit-related or noncredit-related impairment losses were recorded for the three and nine months ended September 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.

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.

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

As of September 30, 2025 and December 31, 2024, the accrued interest receivable related to AFS securities was $ 1.2 million and $ 0.6 million, respectively.

The balance related to HTM securities was immaterial as of September 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.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property and Equipment, Net

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

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Land $ 7,245 $ 7,245

5 unchanged sentences

Total 101,724 63,955

Less accumulated depreciation ( 15,515 ) ( 12,833 )

Accumulated depreciation ( 16,839 ) ( 12,833 )

Property and equipment, net $ 84,885 $ 51,122

Depreciation expense was recorded in the unaudited condensed consolidated statements of operations as follows (in thousands):

Depreciation expense was recorded in the condensed consolidated statements of operations as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

4 unchanged sentences

Goodwill and Other Intangible Assets, Net

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.

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

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

There were no accumulated impairments of goodwill as of September 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 were the same as of September 30, 2025 and December 31, 2024.

See Note 15 for additional information on our reportable segment.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other Intangible Assets, Net

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

June 30, 2025

September 30, 2025

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

2 unchanged sentences

Total other intangible assets, net $ 154,063 $ ( 62,905 ) $ 91,158

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2024

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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;

In May 2025, 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.

Amortization expense of intangible assets was $ 2.3 million and $ 32.6 million for the three and nine months ended September 30, 2025, respectively, and $ 2.3 million and $ 6.8 million for the three and nine months ended September 30, 2024, respectively.

Other Accrued and Current Liabilities

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

June 30, 2025 December 31, 2024

Clinical studies $ 2,204 $ 2,580

September 30, 2025 December 31, 2024

Accrued service fees $ 3,410 $ 2,338

Clinical studies 2,419 2,580

Accrued taxes 1,245 1,076

2 unchanged sentences

Total $ 8,885 $ 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):

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Term debt $ 10,200 $ 10,200

3 unchanged sentences

Total long-term debt $ 10,049 $ 9,745

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

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Years Ending December 31,

2 unchanged sentences

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.

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.

Amounts repaid under the 2024 LSA may not be reborrowed.

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.

The 2024 LSA provides for (i) a term loan in the principal amount of $ 10.0 million, which was drawn on the Closing Date (the “2024 Term Loan”), and (ii) a $ 25.0 million line of credit that was available at our option from the Closing Date through September 30, 2025, with the same interest rate and maturity as the 2024 Term Loan (the “2024 Credit Line”).

The Consent and First Amendment executed on April 4, 2025, modified certain terms of the 2024 LSA, including the extension of the draw period for the 2024 Credit Line from March 31, 2025 to September 30, 2025.

The obligations under the 2024 LSA are secured by substantially all of our assets, excluding intellectual property, the real property held by the Company, and are subject to certain other exceptions and limitations.

We have the right to prepay the 2024 LSA in whole, subject to a prepayment fee of approximately 1.50 % if paid prior to March 26, 2026.

Amounts repaid may not be reborrowed.

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.

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.

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

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

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

As of September 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.

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.

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.

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)

The 2024 Term Loan is interest-only from the Closing Date through November 30, 2025, subject to extension under the Interest-Only Extension Milestone (as defined in the 2024 LSA) provision.

On August 26, 2025, we elected to extend the interest-only period to December 1, 2026.

Beginning in December 2026, the principal payments will be made in equal monthly installments through the maturity date of November 1, 2028.

In addition, we are required to make a final payment equal to 2.00 % of the aggregate original principal amounts of the 2024 Term Loan, due at maturity or upon full repayment.

2024 Term Loan

On March 26, 2024, we drew $ 10.0 million in Term Loans under the terms and provisions of the 2024 LSA.

On the Closing Date, we drew $ 10.0 million under the 2024 Term Loan.

We are obligated to make a final payment of $ 0.2 million under the terms of the 2024 LSA final payment provisions.

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 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 %.

As of September 30, 2025, no payment on principal has been made and the weighted-average effective interest rate for all outstanding debt under the 2024 Term Loan was 7.99 %.

2024 Credit Line

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

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

As of September 30, 2025, no draws had been made on the 2024 Credit Line and the 2024 Credit Line expired on September 30, 2025.

CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Interest Expense on Long-Term Debt

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

18 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

For equity securities traded on foreign exchanges, fair values are determined based on quoted market prices in the applicable foreign markets and are remeasured into U.S.

dollars using exchange rates in effect at each balance sheet date in accordance with ASC Topic 830, Foreign Currency Matters.

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

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.

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 June 30, 2025 and December 31, 2024 (in thousands):

As of June 30, 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 September 30, 2025 and December 31, 2024 (in thousands):

As of September 30, 2025

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

5 unchanged sentences

$ 187,495 $ — $ — $ 187,495

Trading securities (2)

Equity securities (2)

$ 8,907 $ — $ — $ 8,907

9 unchanged sentences

$ 169,866 $ — $ — $ 169,866

Trading securities (2)

Equity securities (2)

$ 3,555 $ — $ — $ 3,555

1 unchanged sentence

$ — $ 10,023 $ — $ 10,023

(1) Classified as “Cash and cash equivalents” in the unaudited condensed consolidated balance sheets.

(2) Classified as “Marketable investment securities” in the unaudited condensed consolidated balance sheets.

(3) Classified as “Current portion of long-term debt” and “Long term debt” in the consolidated balance sheets.

(1) Classified as “Cash and cash equivalents” in the condensed consolidated balance sheets.

(2) Classified as “Marketable investment securities” in the condensed consolidated balance sheets.

(3) Classified as “Current portion of long-term debt” and “Long term debt” in the condensed consolidated balance sheets.

(4) Borrowings approximate their fair value as the interest rate is variable and reflects market rates.

12 unchanged sentences

Any potential claims could subject us to significant liability for damages and harm our reputation.

Our insurance and indemnities

Our insurance and indemnities 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.

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

3 unchanged sentences

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

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

As of September 30, 2025, 1,082,161 shares remained available for grant under the 2019 Plan.

Inducement Plan

On December 22, 2022, our board of directors approved the 2022 Inducement Plan (the “Inducement Plan”).

On August 5, 2025, our compensation committee amended the Inducement Plan to increase the number of shares issuable under the Inducement Plan by 700,000 shares.

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

As of September 30, 2025, there were 828,770 shares available for grant under the amended Inducement Plan.

Stock Options

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

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

Weighted-Average

8 unchanged sentences

Forfeited/Cancelled ( 88,499 ) $ 44.74

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

Exercisable at June 30, 2025

Balance as of September 30, 2025 2,880,269 $ 36.19 4.8 $ 8,933

Exercisable as of September 30, 2025

2,840,192 $ 36.17 4.8 $ 8,933

Restricted Stock Units

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

The following table summarizes our RSU activity for the nine months ended September 30, 2025:

Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value

4 unchanged sentences

Forfeited/Cancelled ( 226,090 ) $ 23.44

Balance as of June 30, 2025

Balance as of September 30, 2025

3,911,189 $ 22.59

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

(1) The aggregate number of shares withheld upon vesting for employee tax obligations was 167,751 for the nine months ended September 30, 2025.

CASTLE BIOSCIENCES, INC.

1 unchanged sentence

Performance-Based Restricted Stock Units

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

The following table summarizes our PSU activity for the nine months ended September 30, 2025:

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

2 unchanged sentences

Granted 172,631 $ 22.23

Vested ( 98,015 ) $ 23.23

Forfeited/Cancelled — $ —

Balance as of June 30, 2025

Balance as of September 30, 2025

350,144 $ 21.72

(1) The aggregate number of shares withheld upon vesting for employee tax obligations was 35,426 for the nine months ended September 30, 2025.

Employee Stock Purchase Plan

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 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.

During the nine months ended September 30, 2025, we issued 160,898 shares of common stock pursuant to scheduled purchases under the ESPP.

As of September 30, 2025, 1,170,613 shares remained available for issuance under the ESPP.

Determining Fair Value - Summary of Assumptions

We use the Black-Scholes valuation model to estimate the fair value of the purchase rights issued under the ESPP at the date of grant, start of the offering or other relevant measurement date.

The following table sets forth assumptions used under the ESPP:

Six Months Ended

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.

The following table sets forth the assumptions used to determine the fair value of stock options:

Nine Months Ended

September 30,

Average expected term (years) N/A 5.0

Expected stock price volatility N/A 80.20 % - 80.20 %

Risk-free interest rate N/A 4.39 % - 4.39 %

Dividend yield N/A — %

The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP:

Nine Months Ended

September 30,

Average expected term (years) 1.2 1.2

5 unchanged sentences

Dividend yield — % — %

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.

We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs.

There were no stock options granted for the nine months ended September 30, 2025.

For the nine months ended September 30, 2024, the weighted-average grant date fair value of the stock options was $ 9.23 per share.

For the nine months ended September 30, 2025 and 2024, the weighted-average grant date fair value of the purchase rights granted under the ESPP was $ 9.71 and $ 12.28 per share, respectively.

CASTLE BIOSCIENCES, INC.

1 unchanged sentence

Stock-Based Compensation Expense

Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):

Stock-based compensation expense is included in the condensed consolidated statements of operations as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

5 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.

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.

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 September 30, 2025, and 2024, respectively, and accelerated the recognition of compensation expense of $ 0.6 million and $ 0.8 million for the nine months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, the total unrecognized stock-based compensation cost related to outstanding awards was $ 69.6 million, which is expected to be recognized over a weighted-average period of 2.3 years.

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

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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law.

The legislation includes a number of significant changes to U.S.

federal tax law that affect both current and deferred income taxes.

Key provisions of the OBBBA include, among other items, changes to certain business deductions, modifications to bonus depreciation rules, and revisions to the treatment of R&D expenditures.

As a result of enactment, changes in current taxes are reflected through the revised average effective tax rate, and deferred taxes, including valuation allowance effects, have been recorded as a discrete item in the period.

The OBBBA did not have a material impact on our condensed consolidated statement of operations for the three and nine months ended September 30, 2025.

Our effective income tax rate was ( 29.8 )% and 18.6 % for the three and nine months ended September 30, 2025, respectively.

The effective rate for the three and nine months ended September 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 72.6 % and 36.7 % for the three and nine months ended September 30, 2024, respectively.

For the three months ended September 30, 2024, differences in our effective rate and the federal statutory rate of 21% was due to revisions in estimated pre-tax income, reflecting uncertainty in continued Medicare coverage for our DecisionDx-SCC test and updated information, as well as stock-based compensation, permanent differences, changes in valuation allowance, R&D tax credit and state income taxes.

For the nine months ended September 30, 2024, differences in our effective rate and the federal statutory rate of 21% was due to stock-based compensation, permanent differences, changes in valuation allowance, R&D tax credit and state income taxes.

Segment and Related Information

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The measures of segment profit and loss for of our single reportable segment were as follows (in thousands):

The measures of segment (loss) income for of our single reportable segment were as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

3 unchanged sentences

Personnel costs 52,863 48,732 156,614 142,699

Organizational and business development costs 14,487 11,835 28,716 22,835

Organizational and marketing costs 11,267 10,271 39,983 33,106

Inventory usage 6,127 5,191 16,316 14,991

2 unchanged sentences

Other segment items 8,580 14,572 51,543 30,202

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

Segment (loss) income $ ( 501 ) $ 2,269 $ ( 21,826 ) $ 8,655

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

Other Segment Items

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, 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.

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, gain or losses on disposal of fixed assets in the routine course of business, fair value adjustment for equity 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.

Our CODM does not individually review budgets or results for these activities.

Other amounts included in the measure of segment profit or loss were as follows (in thousands):

Other amounts included in the measure of segment (loss) income were as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

2 unchanged sentences

Depreciation and amortization 3,816 3,541 36,994 10,229

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

Income tax expense (benefit) 115 6,013 ( 4,974 ) 5,024

Stock-based compensation expense 12,100 13,027 34,487 38,881

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

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.

Changes in fair value of equity securities 3,561 — 3,321 —

Total assets for our reportable segment were located in the United States and were $ 562.8 million and $ 531.2 million as of September 30, 2025 and December 31, 2024, respectively.

Expenditures for additions to long-lived assets were $ 12.5 million and $ 5.8 million for the three months ended September 30, 2025 and 2024, respectively, $ 31.1 million and $ 21.1 million for the nine months ended September 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