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Castle Biosciences Q2 Revenues Rise 79 Percent

NEW YORK – Castle Biosciences reported after the close of the market on Monday that its first quarter revenues rose 79 percent year over year, thanks to more than double the number of tests delivered during the quarter.

For the three months ended June 30, the dermatological diseases diagnostics company reported revenues of $22.8 million, up from $12.7 million a year earlier, beating the average Wall Street estimate of $18.9 million.

Included in revenues for the quarter were revenue adjustments related to tests delivered in prior periods, the company said. These adjustments lowered Q2 revenues by $200,000, compared to an addition of $2.3 million to revenues for the same period in 2020.

Castle said it delivered 7,007 gene expression profile test reports in the second quarter, more than twice as many as the 3,314 tests it delivered in Q2 2020.

By test type, it delivered 5,128 DecisionDx-Melanoma test reports, a 70 percent increase compared to 3,008 reports in Q2 2020; 468 DecisionDx-UM test reports, up 53 percent from 306 reports delivered a year ago; 784 DecisionDx-SCC test results; and 627 DecisionDx DiffDx-Melanoma test reports for suspicious pigmented lesions.

"The Castle team delivered an exceptional quarter, which included record test report volume across each of our gene expression profile tests for a single quarter," Castle CEO Derek Maetzold said in a statement. "We saw continued recovery trends throughout the second quarter, despite cutaneous melanoma diagnoses remaining below historical 2019 levels by approximately 12 percent. Our year-over-year growth in DecisionDx-Melanoma test reports reflects both gains in diagnoses compared to 2020, as well as significant gains in market penetration."

He noted that the company's acquisition of the myPath Melanoma laboratory from Myriad Genetics, and the resulting addition of the myPath Melanoma test to Castle's skin cancer test services, were finalized in late May.

"We believe this acquisition furthers our position as the leader in dermatologic diagnostics and enables us to provide the most comprehensive offering for patients with skin cancer and difficult-to-diagnose melanocytic lesions," Maetzold added.

On a conference call with analysts following the release of the earnings, Maetzold acknowledged that a comparison of test volumes to Q2 2020, when test numbers were down due to the pandemic, may not be all that informative. But he noted that test volumes for DecisionDx-Melanoma in Q2 2021 were also up 39 percent compared to Q2 2019.

He further said that the 627 DecisionDx DiffDx-Melanoma test reports the company sent in June were for a combined assay with myPath Melanoma.

The firm's Q2 net loss widened to $8.8 million, or $.35 per share, from $1.4 million, or $.08 per share, a year earlier. Wall Street analysts had estimated a loss per share of $.37 for Q2.

Castle's Q2 R&D expenses rose 152 percent to $6.8 million from $2.7 million a year earlier, and its SG&A costs doubled to $20.8 million from $10.4 million. On the conference call, Castle CFO Frank Stokes said the company expects its R&D expenses to grow further as it expands its pipeline initiatives.

The company had cash and cash equivalents of $368.3 million at the end of the quarter.

Castle raised its guidance for the year and now anticipates revenues of $89 million to $93 million, up from a previous forecast of $80 million to $83 million. Stokes said this reflects the company's performance over the first half of the year and its optimism for strong growth in the second half. Analysts were expecting revenues of $83.6 million for the year.

Castle's shares fell more than 2 percent to $70.24 in Tuesday morning trading on the Nasdaq.