Castle Biosciences Reports Third Quarter 2023 Results

Original from: business wire

Castle Biosciences, Inc. (Nasdaq: CSTL), a company improving health through innovative tests that guide patient care, today announced its financial results for the third quarter and nine months ended September 30, 2023.

“Our third quarter results were exceptional, demonstrating the strength of our business fundamentals and the innovative test portfolio we’ve built to provide patients and clinicians with actionable information to guide patient care,” said Derek Maetzold, president and chief executive officer of Castle Biosciences. “We delivered another quarter of significant test volume growth and revenue growth, which helped drive positive earnings and positive operating cash flow. Given our consistent performance year-to-date and confidence in our business, we are raising our 2023 revenue guidance to at least $200 million, up from at least $180 million.

“We continue to invest in our strategic growth initiatives across our entire test portfolio, while maintaining our firm focus on financial discipline. We believe our investments will continue to support our long-term value creation plans and the improvement of patient care. Our success is not possible without the continued dedication and efforts of our Castle team, and I would like to express my sincere appreciation for their contributions.”

Third Quarter Ended September 30, 2023, Financial and Operational Highlights

-    Revenues were $61.5 million, a 66% increase compared to $37.0 million during the same period in 2022. Included in revenue for the period were revenue adjustments related to tests delivered in prior periods. These prior period revenue adjustments for the quarter ended September 30, 2023, were $0.9 million of net positive revenue adjustments, compared to $(0.3) million of net negative revenue adjustments for the same period in 2022.

-    ​Adjusted revenues, which exclude the effects of revenue adjustments related to tests delivered in prior periods, were $60.6 million, a 63% increase compared to $37.3 million for the same period in 2022.

-    Delivered 18,409 total test reports in the third quarter of 2023, an increase of 52% compared to 12,114 in the same period of 2022:

    ·    DecisionDx®-Melanoma test reports delivered in the quarter were 8,559, compared to 7,354 in the third quarter of 2022, an increase of 16%.

    ·    DecisionDx®-SCC test reports delivered in the quarter were 2,820, compared to 1,636 in the third quarter of 2022, an increase of 72%.

    ·    MyPath® Melanoma test reports delivered in the quarter were 1,011, compared to 834 MyPath Melanoma and DiffDx®-Melanoma aggregate test reports in the third quarter of 2022, an increase of 21%.

    ·    DecisionDx®-UM test reports delivered in the quarter were 399, compared to 392 in the third quarter of 2022, an increase of 2%.

    ·    TissueCypher® Barrett’s Esophagus test reports delivered in the quarter were 2,829, compared to 690 in the third quarter of 2022, an increase of 310%.

    ·    IDgenetix® test reports delivered in the quarter were 2,791, compared to 1,208 in the third quarter of 2022, an increase of 131%.

-    Gross margin for the quarter ended September 30, 2023, was 78%, and adjusted gross margin was 81%.

-    Net cash provided by operations was $5.0 million, compared to net cash used in operations of $5.2 million for the same period in 2022.

-    Net loss for the third quarter, which includes non-cash stock-based compensation expense of $13.0 million, was $(6.9) million, compared to a net loss of $(20.2) million for the same period in 2022.

-    Adjusted EBITDA for the third quarter was $6.6 million, compared to $(9.6) million for the same period in 2022.

Nine Months Ended September 30, 2023, Financial and Operational Highlights

-    Revenues were $153.7 million, a 56% increase compared to $98.7 million during the same period in 2022. Included in revenue for the period were revenue adjustments related to tests delivered in prior periods. These prior period revenue adjustments for the nine months ended September 30, 2023, were $(3.1) million of net negative revenue adjustments, compared to $(1.9) million of net negative revenue adjustments for the same period in 2022.

-    Adjusted revenues, which exclude the effects of revenue adjustments related to tests delivered in prior periods, were $156.8 million, a 56% increase compared to $100.6 million for the same period in 2022.

-    Delivered 50,145 total test reports in the nine months ended September 30, 2023, an increase of 58% compared to 31,775 in the same period of 2022:

    ·    DecisionDx-Melanoma test reports delivered in the nine months ended September 30, 2023, were 24,739, compared to 20,502 for the same period in 2022, an increase of 21%.

    ·    DecisionDx-SCC test reports delivered in the nine months ended September 30, 2023, were 7,912, compared to 4,122 for the same period in 2022, an increase of 92%.

    ·    MyPath Melanoma test reports delivered in the nine months ended September 30, 2023, were 2,944, compared to 2,739 MyPath Melanoma and DiffDx-Melanoma aggregate test reports for the same period in 2022, an increase of 7%.

    ·    DecisionDx-UM test reports delivered in the nine months ended September 30, 2023, were 1,269, compared to 1,279 for the same period in 2022, a decrease of 1%.

    ·    TissueCypher Barrett’s Esophagus test reports delivered in the nine months ended September 30, 2023, were 5,659, compared to 1,098 for the same period in 2022, following our initial offering of the test beginning in December 2021.

    ·    IDgenetix test reports delivered in the nine months ended September 30, 2023, were 7,622, compared to 2,035 for the same period in 2022, following our initial offering of the test beginning in April 2022.

-    Gross margin for the nine months ended September 30, 2023, was 74%, and adjusted gross margin was 79%.

-    Net cash used in operations was $24.2 million, compared to $35.7 million for the same period in 2022.

-    Net loss for the nine months ended September 30, 2023, which includes non-cash stock-based compensation expense of $39.4 million, was $(54.9) million, compared to $(46.5) million for the same period in 2022.

-    Adjusted EBITDA for the nine months ended September 30, 2023, was $(13.8) million, compared to $(32.2) million for the same period in 2022.

Cash, Cash Equivalents and Marketable Investment Securities

As of September 30, 2023, the Company’s cash, cash equivalents and marketable investment securities totaled $229.8 million.

2023 Outlook

Castle Biosciences is increasing its guidance for anticipated total revenue in 2023. The Company now anticipates generating at least $200 million in total revenue in 2023 compared to the previously provided guidance of at least $180 million.

Third Quarter and Recent Accomplishments and Highlights

Dermatology

-    DecisionDx-Melanoma: In October 2023, the Company announced a new study demonstrating DecisionDx-Melanoma outperforms a nomogram developed at the Memorial Sloan Kettering Cancer Center in predicting the risk of sentinel lymph node positivity in patients with cutaneous melanoma. The study can be found here.

-    DecisionDx-SCC: In October 2023, the Company shared new data demonstrating the ability of its DecisionDx-SCC test to identify localized high-risk cutaneous squamous cell carcinoma patients at a higher risk of metastasis who may benefit from adjuvant radiation therapy. See the Company’s news release from October 3, 2023, for more information.

Gastroenterology

-    In October, the Company announced new data demonstrating the significant clinical utility of its TissueCypher Barrett’s Esophagus test in guiding risk-aligned upstaging of care for patients with non-dysplastic Barrett’s esophagus (BE) at a higher risk of progression to high-grade dysplasia (HGD) or esophageal adenocarcinoma (EAC) than indicated by their clinicopathologic risk factors. See the Company’s news release from October 2, 2023, for more information.

-    In September, the Company announced the publication of data demonstrating that the TissueCypher Barrett’s Esophagus test outperformed standard of care pathology review in predicting malignant progression to HGD and EAC in BE patients with an initial diagnosis of low-grade dysplasia (LGD). The study can be found here.

-    In September, the Company announced new data demonstrating its TissueCypher Barrett’s Esophagus test can identify patients at a higher or lower risk of developing esophageal cancer than indicated by pathologic diagnoses and clinical risk factors to guide escalated or de-escalated patient management. See the Company’s news release from September 8, 2023, for more information.

-    In August, the Company announced a new study published in The American Journal of Gastroenterology showing how use of TissueCypher Barrett’s Esophagus test results can significantly improve management decisions for BE patients with LGD to improve health outcomes. The study can be found here.

Mental Health

-    In September, the Company announced data from a study showing the addition of drug-drug interactions and lifestyle factors to drug-gene interactions provided by its IDgenetix test significantly impacted the number of drug recommendations and contributed to improved remission rates for patients with moderate to severe depression. See the Company’s news releasefrom September 9, 2023, for more information.

Corporate

-    In September, the Company announced that it had earned a Top Workplaces National Industry Award, ranking third among 84 Top Workplaces in the healthcare industry. Castle has earned several additional Top Workplace awards this year, including Top Workplaces USA and Arizona Top Workplace awards, both for the second consecutive year, as well as the Culture Excellence Awards for Innovation, Work-Life Flexibility, Compensation & Benefits, Leadership and Purpose & Values. See the Company’s news release from September 19, 2023, for more information.

-    In September, the Company announced that it had received its Clinical Laboratory Permit from the New York State Department of Health for its laboratory in Pittsburgh. Castle operates clinical laboratories in Pittsburgh and Phoenix. With the recent successful inspection in Pittsburgh, both laboratories are now permitted to provide test services to patients and physicians in the state of New York. Castle’s Phoenix laboratory received its permit in early 2018. See the Company’s news release from September 12, 2023, for more information.

Source: Castle Biosciences Reports Third Quarter 2023 Results