CASTLE BIOSCIENCES INC Q4 FY2024 earnings call

• Dermatology: Combined DecisionDx-Melanoma and DecisionDx-SCC grew 17% in 2024. DecisionDx-Melanoma had 36,008 test reports in 2024 (8% increase from 2023) with 28% market penetration. DecisionDx-SCC had 16,348 test reports in 2024 (43% increase from 2023) with 8% market penetration. Seasonality impacted Q4 2024 volume for DecisionDx-Melanoma. - TissueCypher: Grew 130% in 2024, with 1,234 new ordering clinicians, highlighted in AGA guidelines. - Mental Health: Revised commercial strategy, reallocated resources to inside sales and nonpersonal promotions, expected volume decline in 2025. - Financials: Strong 2024 results with $332.1M full-year revenue (51% growth), gross margin details, expense breakdown including sales, G&A, cost of sales, R&D expenses.

Dermatology Business: Combined DecisionDx-Melanoma and DecisionDx-SCC grew 17% in 2024. DecisionDx-Melanoma had 36,008 test reports in 2024, an 8% increase from 2023, with an addressable market of approximately 130,000 patients (28% penetration). DecisionDx-SCC had 16,348 test reports in 2024, a 43% increase from 2023, with an addressable market of approximately 200,000 patients (8% penetration). TissueCypher: Delivered 20,956 test reports in 2024, a 130% increase from 2023, with 1,234 new ordering clinicians, and an addressable market of approximately 415,000 patients (5% penetration). Mental Health (IDgenetix): Test report volumes and net revenues expected to continue decreasing in 2025, with long-term performance uncertain.

• Anticipate 2025 total revenue of $280M - $295M, accounting for DecisionDx-SCC no longer being reimbursed by Medicare after April 24, 2025. - Gross margin expected in low to mid-70% range, adjusted gross margin in mid- to high 70% range for 2025. - Anticipate positive net cash flow from operations in 2025.

• Potential loss of Medicare coverage for DecisionDx-SCC, impacting patient care and gross margins. - Uncertainty in long-term performance of Mental Health IDgenetix test. - Challenges in regaining Medicare reimbursement for DecisionDx-SCC.

Q: In our checks, we have noticed that private derms usually prefer DecisionDx-Melanoma, but derms in academic centers are still hesitant to order more broadly before guideline inclusion. One, do you agree? B), in the absence of guideline update, how should we think about the opportunity?

A: If I understood the comments back from your interviews, I guess that applies a little contrary to what the -- the 1,800 new first-time ordering clinicians in 2024 that ordered the melanoma test. While it could be that there are clinicians who have been common users and they have kind of fallen into what they view as a sweet spot, so maybe there's not much expansion from some of those current customers, we did see substantial growth in new first-time ordering clinicians last year as well as in 2023. From our perspective, outside of a few of the sort of NCCN centers, we don't hear much feedback at all regarding NCCN guideline inclusion or lack thereof as driving any sort of a personal decision around treating individual patients. Except for, again, a couple of the NCCN institutions who I guess feel obligated to follow guidelines as opposed to treating patients individually.

Q: In the press release, you mentioned the potential for strategic opportunities with respect to capital allocation. Should we be thinking about existing verticals, new verticals, maybe both?

A: I think we are always looking at taking our capital and saying, what can we do to invest in our current commercial efforts to drive appropriate volume and revenue on the topline? Looking at what we can fund for internal pipeline and also external opportunities, as you noted there, Thomas. From just a pure profitability driver for Castle, it's easier to model out and think about locating additional test services that fit in our current verticals because we already have an infrastructure there that we can go ahead and just diversify costs across. That being said, we were not in gastroenterology 3 years ago when we bought Cernostics to acquire TissueCypher. I think we are focused both on seeing what assets are there that can fit within our current portfolios, but are not averse to looking at another area if it makes good sense and we see good strong upside.