CASTLE BIOSCIENCES INC 10-Q

Item 1. Financial Statements. CASTLE BIOSCIENCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) March 31, 2026 December 31, 2025 ASSETS (unaudited) Current Assets Cash and cash equivalents $ 63,764 $ 116,729 Marketable investment securities 197,921 182,776 Accounts receivable, net 42,264 43,382 Inventory 10,461 10,254 Prepaid expenses and other current assets 14,491 7,956 Total current assets 328,901 361,097 Long-term accounts receivable, net 1,921 1,878 Property and equipment, net 100,934 97,443 Operating lease assets 14,424 14,795 Goodwill and other intangible assets, net 97,347 99,574 Other assets – long-term 4,278 3,769 Total assets $ 547,805 $ 578,556 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts payable $ 15,038 $ 18,711 Accrued compensation 19,111 38,287 Contingent consideration 1,000 1,000 Operating lease liabilities 1,254 1,325 Current portion of long-term debt 1,667 417 Other accrued and current liabilities 10,691 8,937 Total current liabilities 48,761 68,677 Long-term debt 8,399 9,640 Noncurrent portion of contingent consideration 1,500 1,500 Noncurrent operating lease liabilities 25,116 25,217 Noncurrent finance lease liabilities 288 314 Deferred tax liability 2,325 2,335 Total liabilities 86,389 107,683 Commitments and Contingencies (Note 12) Stockholders’ Equity Preferred stock, $ 0.001 par value per share; 10,000,000 shares authorized as of March 31, 2026 and December 31, 2025; no shares issued and outstanding as of March 31, 2026 and December 31, 2025 — — Common stock, $ 0.001 par value per share; 200,000,000 shares authorized as of March 31, 2026 and December 31, 2025; 30,295,965 and 29,686,314 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively 30 30 Additional paid-in capital 700,255 694,860 Accumulated deficit ( 238,806 ) ( 224,284 ) Accumulated other comprehensive (loss) income ( 63 ) 267 Total stockholders’ equity 461,416 470,873 Total liabilities and stockholders’ equity $ 547,805 $ 578,556 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents CASTLE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share data) Three Months Ended March 31, 2026 2025 NET REVENUES $ 83,679 $ 87,988 OPERATING EXPENSES Cost of sales (exclusive of amortization of acquired intangible assets) 20,533 16,383 Research and development 14,428 12,588 Selling, general and administrative 64,899 58,620 Amortization of acquired intangible assets 2,226 28,325 Total operating expenses, net 102,086 115,916 Operating loss ( 18,407 ) ( 27,928 ) Interest income 2,545 3,099 Net gains (losses) on equity securities 2,022 ( 1,425 ) Interest expense ( 134 ) ( 17 ) Other loss ( 439 ) — Loss before income taxes ( 14,413 ) ( 26,271 ) Income tax expense (benefit) 109 ( 423 ) Net loss $ ( 14,522 ) $ ( 25,848 ) Loss per share, basic and diluted $ ( 0.49 ) $ ( 0.90 ) Weighted-average shares outstanding, basic and diluted 29,889 28,609 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents CASTLE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (in thousands) Three Months Ended March 31, 2026 2025 Net loss $ ( 14,522 ) $ ( 25,848 ) Other comprehensive loss: Net unrealized loss on marketable investment securities ( 330 ) ( 99 ) Comprehensive loss $ ( 14,852 ) $ ( 25,947 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents CASTLE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (in thousands, except share data) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount BALANCE, JANUARY 1, 2025 28,483,195 $ 28 $ 655,703 $ ( 200,126 ) $ 230 $ 455,835 Stock-based compensation expense — — 11,179 — — 11,179 Exercise of common stock options 6,331 — 18 — — 18 Issuance of common stock from vested restricted stock units, net of shares withheld for taxes 251,970 1 ( 2,517 ) — — ( 2,516 ) Issuance of common stock under the employee stock purchase plan 103,441 — 1,737 — — 1,737 Net unrealized loss on marketable investment securities — — — — ( 99 ) ( 99 ) Net loss — — — ( 25,848 ) — ( 25,848 ) BALANCE, MARCH 31, 2025 28,844,937 $ 29 $ 666,120 $ ( 225,974 ) $ 131 $ 440,306 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount BALANCE, JANUARY 1, 2026 29,686,314 $ 30 $ 694,860 $ ( 224,284 ) $ 267 $ 470,873 Stock-based compensation expense — — 9,776 — — 9,776 Exercise of common stock options 28,494 — 322 — — 322 Issuance of common stock from vested restricted stock units and performance-based restricted stock units, net of shares withheld for taxes 486,737 — ( 6,598 ) — — ( 6,598 ) Issuance of common stock under the employee stock purchase plan 94,420 1,895 — — 1,895 Net unrealized loss on marketable investment securities — — — — ( 330 ) ( 330 ) Net loss — — — ( 14,522 ) — ( 14,522 ) BALANCE, MARCH 31, 2026 30,295,965 $ 30 $ 700,255 $ ( 238,806 ) $ ( 63 ) $ 461,416 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents CASTLE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands) Three Months Ended March 31, 2026 2025 OPERATING ACTIVITIES Net loss $ ( 14,522 ) $ ( 25,848 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,929 29,764 Stock-based compensation expense 9,776 11,179 Net (gains) losses on equity securities ( 2,022 ) 1,425 Deferred income taxes ( 10 ) ( 770 ) Accretion of discounts on marketable investment securities ( 454 ) ( 1,435 ) Other 532 30 Change in operating assets and liabilities: Accounts receivable 1,075 ( 5,217 ) Prepaid expenses and other current assets ( 6,667 ) ( 3,364 ) Inventory ( 207 ) 1,286 Operating lease assets 371 420 Other assets ( 530 ) ( 38 ) Accounts payable 3,193 615 Operating lease liabilities ( 172 ) ( 526 ) Accrued compensation ( 19,176 ) ( 14,698 ) Other accrued and current liabilities 2,755 1,141 Net cash used in operating activities ( 22,129 ) ( 6,036 ) INVESTING ACTIVITIES Purchases of marketable investment securities ( 55,136 ) ( 48,431 ) Proceeds from maturities of marketable investment securities 39,100 36,300 Purchases of debt securities classified as held-to-maturity — ( 5,569 ) Proceeds from sale of equity securities 2,681 — Purchases of property and equipment ( 12,455 ) ( 4,740 ) Proceeds from sale of property and equipment 7 9 Net cash used in investing activities ( 25,803 ) ( 22,431 ) FINANCING ACTIVITIES Proceeds from exercise of common stock options 322 18 Payment of employees’ taxes on vested restricted stock units and performance-based restricted stock units ( 6,598 ) ( 2,515 ) Proceeds from contributions to the employee stock purchase plan 1,267 970 Repayment of principal portion of finance lease liabilities ( 24 ) ( 26 ) Net cash used in financing activities ( 5,033 ) ( 1,553 ) NET CHANGE IN CASH AND CASH EQUIVALENTS ( 52,965 ) ( 30,020 ) Beginning of period 116,729 119,709 End of period $ 63,764 $ 89,689 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents CASTLE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) (in thousands) Three Months Ended March 31, 2026 2025 DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Accrued purchases of property and equipment $ 4,097 $ 3,217 Finance lease assets obtained in exchange for lease obligations $ — $ 44 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Organization and Description of Business Castle Biosciences, Inc. (the “Company,” “we,” “us” or “our”) was incorporated in the state of Delaware on September 12, 2007. We are a commercial-stage diagnostics company focused on providing clinicians and their patients with personalized, clinically actionable information to inform treatment decisions and improve health outcomes. We are based in Friendswood, Texas (a suburb of Houston, Texas), and our laboratory operations are conducted at our facilities located in Phoenix, Arizona and Pittsburgh, Pennsylvania. 2. Summary of Significant Accounting Policies Basis of Presentation Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). 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, 2026, we had an accumulated deficit of $ 238.8 million. We believe our $ 63.8 million of cash and cash equivalents and $ 197.9 million of marketable investment securities as of March 31, 2026, 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, 2026; 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, 2026 and 2025; and the condensed consolidated statements of cash flows for the three months ended March 31, 2026 and 2025 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, 2026, the results of our consolidated operations for the three months ended March 31, 2026 and 2025 and our consolidated cash flows for the three months ended March 31, 2026 and 2025. The financial data and other information disclosed in these notes related to the three months ended March 31, 2026 and 2025 are also unaudited. The results for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period. The balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date. 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, 2025 filed with the Securities and Exchange Commission on February 26, 2026. Use of Estimates 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. 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. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. 7 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Segment Reporting Operating segments are components of an enterprise engaging in business activities from which it may recognize revenues and incur expenses, where discrete financial information is available, and where its operating results are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and to assess its performance. A CODM may be an individual or a decision-making group. A reportable segment consists of one or more operating segments. For additional information on our segment reporting, see Note 15. Cash and Cash Equivalents including Concentrations of Credit Risk Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term United States (“U.S.”) government obligations. Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the financial institutions in which deposits are held. Marketable Investment Securities Our marketable investment securities are comprised of debt and equity securities. All debt securities are recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, Investments-Debt Securities (“ASC 320”). Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such determination at each balance sheet date. 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 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 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 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 net gains (losses) on 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 (“ASC 830”). 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. 8 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 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 (“Previse”), 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. In December 2025 and March 2026, two commercial milestones were achieved, resulting in aggregate Earnout Payments of $ 1.0 million becoming payable. The payment related to the initial milestone was extended. Both earnout payments are expected to be made within 60 days following the end of the period. Contingent consideration is classified as current or noncurrent in the condensed consolidated balance sheets based on the contractual timing of future settlement. Revenue Recognition In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. 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. 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, 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. 9 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Accounts Receivable and Allowance for Credit Losses 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. We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. We have elected the practical expedient under ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”) to assume that current conditions as of the balance sheet date do not change for the remaining life of our accounts receivable. Accordingly, management’s estimates are based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of March 31, 2026 and December 31, 2025. 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. Convertible Loan Receivable On November 7, 2025, we entered into a Convertible Loan Agreement with SciBase (the “Convertible Loan Receivable”), pursuant to which we loaned SEK 20.0 million, approximately $ 2.1 million based on the exchange rate in effect on November 7, 2025. The Convertible Loan Receivable bears interest at a rate of 2.00 % plus the three-month Stockholm Interbank Offered Rate (“STIBOR”), payable quarterly. SciBase may prepay all or a portion of the Convertible Loan Receivable at any time. The Convertible Loan Receivable matures on November 7, 2030, at which time we have the option, at our sole discretion, to convert the outstanding principal plus accrued interest into shares of SciBase that are listed on the Nasdaq First North Growth Market in Sweden, receive full repayment in cash, or receive a combination of cash and shares. We accounted for the convertible loan as a receivable within the scope of ASC Topic 310, Receivables. The carrying amount of the convertible loan is presented at amortized cost, within other assets - long-term in the condensed consolidated balance sheets. The Convertible Loan Agreement is remeasured into U.S. dollars using exchange rates in effect at each balance sheet date in accordance with ASC 830 with changes in exchange rates recognized in earnings. In addition, the embedded conversion feature to shares of SciBase did not meet the definition of a derivative and was not bifurcated from the host contract under ASC Topic 815, Derivatives and Hedging . We have determined that expected credit losses associated with the loan are insignificant and, accordingly, have not recorded a credit loss allowance under ASC Topic 326-20, Financial Instruments - Credit Losses. Interest income on the Convertible Loan Receivable is recognized quarterly and included in interest income in the condensed consolidated statements of operations. Accrued interest receivable is recorded within prepaid expenses and other current assets in the condensed consolidated balance sheets. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally ranging from 5 to 39 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful life of the asset or the term of the lease. Leasehold improvements primarily relate to office and laboratory facilities in Phoenix, Arizona and Pittsburgh, Pennsylvania , and are generally depreciated over the remaining lease terms, which expire in 2034 and 2033, respectively. Maintenance and repairs are expensed as incurred, and material improvements are capitalized. 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 condensed consolidated balance sheets and any resulting gain or loss is reflected in the condensed consolidated statements of operations in the period realized. 10 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Goodwill 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 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 unit level where goodwill is held. Testing begins with completion of an optional qualitative assessment. If the qualitative assessment suggests that impairment is more likely than not, quantitative testing is conducted. If the qualitative assessment is bypassed, we proceed directly to quantitative testing. Quantitative testing consists of comparing the carrying value of goodwill to its estimated fair value. 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 condensed consolidated statements of operations. Accrued Compensation We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. 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, 2026 and December 31, 2025, we accrued approximately $ 7.9 million and $ 28.1 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 Stock-based compensation expense for equity instruments is measured based on the grant-date fair value of the awards. For stock option awards, and purchase rights made under the 2019 Employee Stock Purchase Plan (the “ESPP”), the fair value is estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. 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. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements (“Retirement Policy”). Stock-based awards falling into the scope of the Retirement Policy 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; 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. 11 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Recently Adopted Accounting Pronouncements 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. We adopted the standard effective January 1, 2026, with no impact on our consolidated financial statements. Accounting Pronouncements Yet to be Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income (Subtopic 220-40)—Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses (“ASU 2024-03”), which specifies additional disclosure requirements. The amendments in ASU 2024-03 require disclosure about the composition of certain income expense line items, such as purchases of inventory, employee compensation, and other expenses, as well as disclosure about selling expenses. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures. In September 2025, the FASB issued ASU No. 2025-06, Intangibles —Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal-use software costs. The amendments in ASU 2025-06 remove all references to prescriptive and sequential software development stages throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, 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. 3. Revenue 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 TissueCypher® test for patients diagnosed with Barrett’s esophagus. We also provide our DecisionDx®-UM test for uveal melanoma, MyPath® Melanoma test for patients with melanocytic lesions and our DecisionDx®-SCC test for cutaneous squamous cell carcinoma. IDgenetix®, a pharmacogenomics testing service focused on mental health, was previously offered and discontinued in May 2025. 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. The payments for our services are primarily made by third-party payors, including Medicare and commercial health insurance carriers. Certain contracts contain a contractual commitment of a reimbursement rate that differs from our list prices. However, absent a positive coverage policy, with or without a contractually committed reimbursement rate, with a commercial carrier or governmental program, our diagnostic tests may or may not be paid by these entities. 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-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. 12 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 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 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. 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. Variable consideration attributable to these price concessions is measured at the expected value using the “most likely amount” method under ASC 606. The amounts are estimated using historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as the judgment and actions of third parties. Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a predictable pattern and history of collectability with a payor. 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 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, 2026 and 2025 were $ 0.6 million of net negative and $ 0.8 million of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration. Because our contracts with customers have an expected duration of one year or less, we have elected the practical expedient in ASC 606 to not disclose information about our remaining performance obligations. 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, 2026 and December 31, 2025. Disaggregation of Revenues The table below provides the disaggregation of revenue by type (in thousands): Three Months Ended March 31, 2026 2025 Dermatologic (1) $ 41,105 $ 62,962 Non-Dermatologic (2) 42,574 25,026 Total net revenues $ 83,679 $ 87,988 (1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and MyPath Melanoma. (2) Consists of TissueCypher, DecisionDx-UM and IDgenetix. 13 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) We have presented disaggregated net revenues included in our single reportable segment in the table above. The characteristics for each test in our single segment are similar, with each test having a single performance obligation. Our CODM is the single individual responsible for managing our segment and reviews consolidated results and budgets in assessing performance and in allocating resources. See Note 15 for additional information about our reportable segment. Payor Concentration We rely upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of our tests. Our significant third-party payors and their related revenues, each of which accounted for more than 10% of total revenues and accounts receivable balances were as follows: Percentage of Revenues Percentage of Accounts Receivable (current) as of Percentage of Accounts Receivable (noncurrent) as of Three Months Ended March 31, 2026 2025 March 31, 2026 December 31, 2025 March 31, 2026 December 31, 2025 Medicare 40 % 47 % 19 % 18 % * * Payor A 14 % 15 % 14 % 15 % 17 % 16 % Payor B * * 17 % 22 % * 10 % * Less than 10% 4. 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. 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. 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, 2026 and 2025 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands): Three Months Ended March 31, 2026 2025 Stock options 2,769 2,983 RSUs and PSUs 3,946 3,739 ESPP 256 176 Total 6,971 6,898 14 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 5. Marketable Investment Securities Marketable investment securities consisted of the following (in thousands): March 31, 2026 December 31, 2025 Current marketable investment securities: Equity securities $ 8,130 $ 5,555 Debt securities - AFS 184,194 171,631 Debt securities - HTM 5,597 5,590 Total current marketable investment securities $ 197,921 $ 182,776 On January 26, 2026, in connection with SciBase’s rights offering, we completed an amendment to our previously disclosed subscription commitment. We agreed to increase our commitment to subscribe for shares without subscription rights from 115.0 million shares to 125.0 million shares. This amendment was intended to achieve an outcome substantially similar to full participation under our subscription rights. In addition, we purchased subscription rights for another 30.5 million shares from a separate SciBase shareholder. These purchased rights, together with our shares without subscription rights, aggregated to a total share purchase of 155.5 million shares for $ 3.6 million. Equity Securities The portion of unrealized gains and losses related to equity securities still held during the period is as follows (in thousands): Three Months Ended March 31, 2026 2025 Net gains (losses) on equity securities $ 2,022 $ ( 1,425 ) Less: Net loss recognized on equity securities sold ( 127 ) — Net unrealized gains (losses) recognized on equity securities still held $ 2,149 $ ( 1,425 ) 15 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Debt Securities The following tables present our debt securities (in thousands): March 31, 2026 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities - AFS $ 184,257 $ 60 $ ( 123 ) $ 184,194 U.S. government securities - HTM 5,597 2 — 5,599 Total debt securities $ 189,854 $ 62 $ ( 123 ) $ 189,793 December 31, 2025 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities - AFS $ 171,364 $ 269 $ ( 2 ) $ 171,631 U.S. government securities - HTM 5,590 11 — 5,601 Total debt securities $ 176,954 $ 280 $ ( 2 ) $ 177,232 Our U.S. government securities includes both AFS and HTM securities. The AFS securities are available to be sold to meet operating needs or otherwise, but are generally held through maturity. We classify all AFS investments as current assets, as these are readily available for use in current operations. As of March 31, 2026 and December 31, 2025, all of our AFS securities had contractual maturities of one year or less. 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. For the three months ended March 31, 2026 and 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, 2026 and December 31, 2025. There were no realized gains or losses on sales of debt securities for the three months ended March 31, 2026 and 2025. In addition, no credit-related or noncredit-related impairment losses were recorded for the three months ended March 31, 2026 and 2025. Accrued interest receivable for our AFS and HTM U.S. government securities is included in prepaid expenses and other current assets in the condensed consolidated balance sheets. As of March 31, 2026 and December 31, 2025, the accrued interest receivable related to AFS securities was $ 1.3 million and $ 1.1 million, respectively. As of March 31, 2026 and December 31, 2025, the accrued interest receivable related to HTM securities was immaterial. Additional information relating to the fair value of marketable investment securities can be found in Note 11. 16 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 6. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): March 31, 2026 December 31, 2025 Land $ 7,245 $ 7,245 Building 43,872 — Lab equipment 33,602 33,034 Leasehold improvements 14,875 14,834 Computer equipment 6,372 5,920 Furniture and fixtures 4,081 3,648 Construction-in-progress 10,751 51,059 Total 120,798 115,740 Less: Accumulated depreciation ( 19,864 ) ( 18,297 ) Property and equipment, net $ 100,934 $ 97,443 In 2025, construction-in-progress related primarily to construction of our new headquarters in Friendswood, Texas, which was substantially completed in February 2026. Upon completion, we commenced depreciation of the capitalized construction costs of the building over an estimated useful life of 39 years. As of March 31, 2026, construction-in-progress related primarily to leasehold improvements for our office and laboratory facilities in Scottsdale, Arizona. Depreciation expense was recorded in the condensed consolidated statements of operations as follows (in thousands): Three Months Ended March 31, 2026 2025 Cost of sales (exclusive of amortization of acquired intangible assets) $ 1,158 $ 903 Research and development 129 94 Selling, general and administrative 416 442 Total $ 1,703 $ 1,439 7. Goodwill and Other Intangible Assets, Net Goodwill 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 March 31, 2026 and December 31, 2025, where all goodwill was allocated. As of March 31, 2026 and December 31, 2025, our goodwill was $ 10.7 million. There were no accumulated impairments of goodwill as of March 31, 2026 or December 31, 2025. See Note 15 for additional information on our reportable segment. 17 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Other Intangible Assets, Net Our other intangible assets, net consisted of the following (in thousands): March 31, 2026 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 153,500 $ ( 66,920 ) $ 86,580 10.0 Assembled workforce 563 ( 487 ) 76 0.7 Total other intangible assets, net $ 154,063 $ ( 67,407 ) $ 86,656 December 31, 2025 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 153,500 $ ( 64,721 ) $ 88,779 10.3 Assembled workforce 563 ( 460 ) 103 0.9 Total other intangible assets, net $ 154,063 $ ( 65,181 ) $ 88,882 During the first quarter of 2025, we made the decision to discontinue our IDgenetix test offering, effective May 2025. 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. Amortization expense of intangible assets was $ 2.2 million and $ 28.3 million for the three months ended March 31, 2026 and 2025, respectively. 8. Other Accrued and Current Liabilities Other accrued and current liabilities consisted of the following (in thousands): March 31, 2026 December 31, 2025 Accrued service fees $ 4,007 $ 3,213 Clinical studies 2,718 2,674 Self-insurance liability 2,333 — ESPP contributions 296 924 Other 1,337 2,126 Total $ 10,691 $ 8,937 18 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 9. Long-Term Debt Our long-term debt is presented in the table below (in thousands): March 31, 2026 December 31, 2025 Term debt $ 10,200 $ 10,200 Unamortized discount ( 134 ) ( 143 ) Total debt, net 10,066 10,057 Less: Current portion of long-term debt ( 1,667 ) ( 417 ) Total long-term debt $ 8,399 $ 9,640 Future maturities of principal amounts on long-term debt as of March 31, 2026 were as follows (in thousands): Years Ending December 31, 2026 $ 417 2027 5,000 2028 4,583 Total $ 10,000 2024 Loan and Security Agreement 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) 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 which expired undrawn on 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 us, and are subject to certain other exceptions and limitations. We have the right to prepay the 2024 LSA in whole. 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 further amend the terms of the 2024 LSA, the consent of the Lender would be required. As of March 31, 2026, 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 2024 Term Loan was interest-only from the Closing Date through November 30, 2025, however, on August 26, 2025, we elected to exercise our option 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 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 March 31, 2026, no payment on principal has been made and the weighted-average effective interest rate for all outstanding debt under the 2024 Term Loan was 7.69 %. 19 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Interest Expense on Long-Term Debt Interest expense on long-term debt consisted of the following (in thousands): Three Months Ended March 31, 2026 2025 Interest expense on long term debt $ 184 $ 202 Less: Capitalized interest ( 58 ) ( 194 ) Total $ 126 $ 8 10. Leases Unit 1 Pittsburgh Lease On March 19, 2026, we entered into a lease agreement with Faros ACA RE, LLC for approximately 21,000 square feet of additional office and laboratory space in Pittsburgh, Pennsylvania within a building we already partially occupy (the “Unit 1 Pittsburgh Lease”). The lease has an initial term of approximately 11 years and will commence upon completion of landlord-provided leasehold improvements. The lease includes tenant improvement allowances and provides for an extension option and a one -time early termination option, each subject to certain conditions. As of March 31, 2026, the Unit 1 Pittsburgh Lease has not commenced, and accordingly, we have not recognized a right-of-use asset or lease liability in our condensed consolidated balance sheet. 11. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used in measuring fair value. There are three levels to the fair value hierarchy based on the reliability of inputs, as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 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. 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. 20 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 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, 2026 and December 31, 2025 (in thousands): As of March 31, 2026 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Money market funds (1) $ 68,684 $ — $ — $ 68,684 U.S. government securities - AFS (2) $ 184,194 $ — $ — $ 184,194 Equity securities (2) $ 8,130 $ — $ — $ 8,130 Liabilities Term Debt (3)(4) $ — $ 10,066 $ — $ 10,066 As of December 31, 2025 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets Money market funds (1) $ 108,914 $ — $ — $ 108,914 U.S. government securities - AFS (2) $ 171,631 $ — $ — $ 171,631 Equity securities (2) $ 5,555 $ — $ — $ 5,555 Liabilities Term Debt (3)(4) $ — $ 10,057 $ — $ 10,057 (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. We have U.S. government securities that are HTM investments and are carried at amortized costs. The fair value of our HTM investments is classified as Level 1 of the fair value hierarchy. For additional information on the carrying amount and fair value of our HTM investments, see Note 5. The Convertible Loan Receivable with SciBase is carried at amortized cost which approximates fair value due to the variable interest rate and market-based terms of the instrument. Fair value is estimated using a discounted cash flow model. The inputs used to fair value the Convertible Loan Receivable are classified as Level 2 in the fair value hierarchy and include a three-month STIBOR and a market credit spread. For additional information on the carrying amount and estimated fair value of our Convertible Loan Receivable, see Note 2. 21 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 12. Commitments and Contingencies From time to time, we may be involved in legal proceedings arising in the ordinary course of business. On February 1, 2024, we received a subpoena from the Department of Health and Human Services, Office of Inspector General, seeking documents and information concerning claims submitted for payment under federal healthcare programs. The subpoena requested that we produce documents relating primarily to interactions with medical providers and billing to government-funded healthcare programs for our tests. The time period covered by the subpoena is January 1, 2015 through the date of issuance of the subpoena. We are continuing to cooperate with the government’s request and are in the process of responding to the subpoena. We are unable to predict what action, if any, might be taken in the future by the Department of Health and Human Services, Office of Inspector General, or any other governmental authority as a result of the matters related to this subpoena. No claims have been made against us at this time. 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. 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. 13. Stock Incentive Plans and Stock-Based Compensation Equity Incentive Plan On July 24, 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan provides for automatic annual increases to the number of shares authorized for issuance, equal to 5 % of our common shares outstanding as of the immediately preceding year end, through January 1, 2029. Under this provision, effective January 1, 2026, an additional 1,484,315 shares became available under the 2019 Plan. As of March 31, 2026, 1,590,533 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”). 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, 2026, there were 746,182 shares available for grant under the amended Inducement Plan. Stock Options Stock option activity under our stock plans for the three months ended March 31, 2026 is set forth below: Weighted-Average Stock Options Outstanding Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2025 2,784,432 $ 36.53 Granted — $ — Exercised ( 28,494 ) $ 11.30 Forfeited/Cancelled ( 12,590 ) $ 53.51 Balance as of March 31, 2026 2,743,348 $ 36.71 4.3 $ 9,262 Exercisable as of March 31, 2026 2,740,690 $ 36.72 4.3 $ 9,262 22 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Restricted Stock Units The following table summarizes our RSU activity for the three months ended March 31, 2026: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2025 3,395,762 $ 22.42 Granted 1,268,848 $ 27.57 Vested (1) ( 628,644 ) $ 22.12 Forfeited/Cancelled ( 52,647 ) $ 24.21 Balance as of March 31, 2026 3,983,319 $ 24.08 (1) The aggregate number of shares withheld upon vesting for employee tax obligations was 201,867 for the three months ended March 31, 2026. Performance-Based Restricted Stock Units The following table summarizes our PSU activity for the three months ended March 31, 2026: Performance-Based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2025 350,144 $ 21.72 Granted 172,397 $ 27.57 Vested (1) ( 88,757 ) $ 21.23 Forfeited/Cancelled — $ — Balance as of March 31, 2026 433,784 $ 24.15 (1) The aggregate number of shares withheld upon vesting for employee tax obligations was 28,797 for the three months ended March 31, 2026. 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 296,863 shares becoming available under the ESPP effective January 1, 2026. During the three months ended March 31, 2026, we issued 94,420 shares of common stock pursuant to scheduled purchases under the ESPP. As of March 31, 2026, 1,373,056 shares remained available for issuance under the ESPP. Determining Fair Value - Summary of Assumptions The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Three Months Ended March 31, 2026 2025 Average expected term (years) 1.2 1.2 Expected stock price volatility 54.54 % - 58.00 % 56.55 % - 85.21 % Risk-free interest rate 3.41 % - 3.61 % 3.88 % - 4.22 % Dividend yield — % — % We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs. 23 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Fair Value There were no stock options granted for the three months ended March 31, 2026 and 2025. For the three months ended March 31, 2026 and 2025, the weighted-average grant date fair value of the purchase rights granted under the ESPP was $ 11.27 and $ 9.43 per share, respectively. Stock-Based Compensation Expense Stock-based compensation expense is included in the condensed consolidated statements of operations as follows (in thousands): Three Months Ended March 31, 2026 2025 Cost of sales (exclusive of amortization of acquired intangible assets) $ 1,257 $ 1,456 Research and development 1,443 1,895 Selling, general and administrative 7,076 7,828 Total stock-based compensation expense $ 9,776 $ 11,179 Included in total stock-based compensation expense is $ 0.2 million and $ 0.3 million for the three months ended March 31, 2026 and 2025, respectively, from the accelerated recognition of expense for modifications of awards falling in scope of the Retirement Policy. As of March 31, 2026, the total unrecognized stock-based compensation cost related to outstanding awards was $ 94.5 million, which is expected to be recognized over a weighted-average period of 2.8 years. The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur. 14. Income Taxes Our effective tax rate was immaterial for the three months ended March 31, 2026 and 2025. The effective rate for the three months ended March 31, 2026 and 2025 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. 15. Segment and Related Information We derive revenues through the delivery of test reports for our molecular diagnostic tests. All of our operations are located within the U.S. and our business is focused on the U.S. market. We have a single reportable segment consisting of a single operating segment. 24 Table of Contents CASTLE BIOSCIENCES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) The measures of segment profit or loss for our single reportable segment were as follows (in thousands): Three Months Ended March 31, 2026 2025 Net revenues from external customers (1) $ 83,679 $ 87,988 Significant segment expenses : Personnel costs 58,367 52,200 Organizational and marketing costs 15,594 14,229 Inventory usage 6,437 4,731 Clinical studies and publication costs 2,542 2,085 Professional services 3,007 3,576 Other segment items 12,254 37,015 Segment loss $ ( 14,522 ) $ ( 25,848 ) (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, including 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, including insurance premiums and warranties for lab equipment, public company costs (less audit fees), interest and other non-operating loss or 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): Three Months Ended March 31, 2026 2025 Interest income $ 2,545 $ 3,099 Interest expense ( 134 ) ( 17 ) Depreciation and amortization 3,929 29,764 Income tax expense (benefit) 109 ( 423 ) Stock-based compensation expense 9,776 11,179 Net gains (losses) on equity securities 2,022 ( 1,425 ) Total assets for our reportable segment were located in the U.S. and were $ 547.8 million and $ 578.6 million as of March 31, 2026 and December 31, 2025, respectively. Expenditures for additions to long-lived assets were $ 5.2 million and $ 5.7 million for the three months ended March 31, 2026, and 2025, respectively. 25 Table of Contents