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What changed in CASTLE BIOSCIENCES INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CASTLE BIOSCIENCES INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+701 added−698 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in CASTLE BIOSCIENCES INC's 2025 10-K

701 paragraphs added · 698 removed · 539 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

131 edited+39 added−45 removed119 unchanged
Biggest changeWe face competition for experienced, qualified personnel in our industry, particularly for highly skilled scientists, laboratory technicians and salespeople versed in diagnostic testing services. 24 Table of Contents The tables below provide information on the distribution of our employees by functional area and by location as of December 31, 2024: Number of Employees Laboratory Testing Operations 247 Research & Development 109 Sales & Marketing 218 Administrative & General 187 Total as of December 31, 2024 761 Number of Employees Friendswood, Texas 102 Phoenix, Arizona 202 Pittsburgh, Pennsylvania 120 Home-based 337 Total as of December 31, 2024 761 Our employees are not represented by labor unions or covered by collective bargaining agreements.
Biggest changeWe face competition for experienced, qualified personnel in our industry, particularly for highly skilled scientists, laboratory technicians and salespeople versed in diagnostic testing services. Our employees are not represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.
Maintaining commercial success for our existing test portfolio requires generating ongoing evidence, such as clinical performance, clinical use documentation, to support appropriate clinician adoption, reimbursement success and guideline inclusion. The clinical validity and utility of our test portfolio is supported by peer-reviewed publications and ongoing clinical studies.
Maintaining commercial success for our existing test portfolio requires generating ongoing evidence, such as clinical performance and clinical use documentation, to support appropriate clinician adoption, reimbursement success and guideline inclusion. The clinical validity and utility of our test portfolio is supported by peer-reviewed publications and ongoing clinical studies.
A manufacturer can submit a request for de novo classification if the manufacturer is unable to identify a predicate device and the new device or new use of the device presents a moderate or low risk. Under the de novo classification pathway, FDA may reclassify the device from Class III to class II or Class I, as appropriate.
A manufacturer can submit a request for de novo classification if the manufacturer is unable to identify a predicate device and the new device or new use of the device presents a moderate or low risk. Under the de novo classification pathway, the FDA may reclassify the device from Class III to Class II or Class I, as appropriate.
In addition to competitive base pay, we offer the following benefits, among others, to our full-time employees: • a defined contribution 401(k) plan with employer matching contributions; • an annual bonus opportunity; • equity compensation, including stock options and/or restricted stock units (“RSUs”) and an employee stock purchase plan; • medical, dental and vision plans; • paid maternity, paternity and adoption leave policies; • paid holidays and paid time off; and • an employee assistance program.
In addition to competitive base pay, we offer the following benefits, among others, to our full-time employees: • a defined contribution 401(k) plan with employer matching contributions; • an annual bonus opportunity; • equity compensation, including stock options and/or restricted stock units and an employee stock purchase plan; • medical, dental and vision plans; • paid maternity, paternity and adoption leave policies; • paid holidays and paid time off; and • an employee assistance program.
Depending on the billing arrangement and applicable law, we must bill various third-party payors, such as insurance companies, Medicare, Medicaid, and patients, all of which have different billing requirements. Compliance with applicable laws and regulations as well as internal compliance policies and procedures adds further complexity to the billing process.
Depending on the billing arrangement and applicable law, we must bill various third-party payors, such as insurance companies, Medicare and Medicaid, all of which have different billing requirements. Compliance with applicable laws and regulations as well as internal compliance policies and procedures adds further complexity to the billing process.
Termination can occur due to material breach, misuse of licensed rights, insolvency events, or at our discretion upon notice and payment of any outstanding amounts. Intellectual Property Our core technology for our products is related to methods and devices for analysis of genetic expression.
Termination can occur due to material breach, misuse of licensed rights, insolvency events, or at our discretion upon notice and payment of any outstanding amounts. Intellectual Property Our core technology for our products is related to methods and devices for analysis of genetic and proteinomic expression.
With the evolution of genetic testing, we have seen individual third-party payors’ medical coverage policies around the CPT codes we bill and their associated payment rates change over time, resulting in changes to our reimbursement.
With the evolution of genetic testing, we have seen individual third-party payors’ medical coverage policies around the CPT and PLA codes we bill and their associated payment rates change over time, resulting in changes to our reimbursement.
This foundational strategy remains the guidepost for the direction of our company and the basis of long-term value creation. Our Testing Solutions Our tests are designed to deliver personalized information to help better inform care decisions.
This foundational strategy remains the guidepost for the direction of our company and the basis of long-term value creation. Our Testing Solutions Our tests are designed to deliver personalized information to help better inform clinical care decisions.
We anticipate there will continue to be proposals by legislators at both the federal and state levels, regulators and commercial third-party payors to reduce costs while expanding individual healthcare benefits.
We further anticipate there will continue to be proposals by legislators at both the federal and state levels, regulators and commercial third-party payors to reduce costs while expanding individual healthcare benefits.
The owned and licensed families contain issued patents and pending applications that relate to devices, systems, and methods for macromolecular analysis, and reflect our active and ongoing research programs. 14 Table of Contents Individual patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained.
The owned and licensed families contain issued patents and pending applications that relate to devices, systems, and methods for macromolecular analysis, and reflect our active and ongoing research programs. 13 Table of Contents Individual patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained.
Based upon this review, DecisionDx-SCC test began receiving coverage in April 2022. On June 9, 2022, Novitas posted a draft oncology biomarker LCD that proposes to rely upon evidentiary reviews sourced from three databases for all oncology biomarker tests: ClinGen, OncoKB and National Comprehensive Cancer Network (“NCCN”).
Based upon this review, DecisionDx-SCC test began receiving coverage in April 2022. On June 9, 2022, Novitas posted a draft oncology biomarker LCD that proposed to rely upon evidentiary reviews sourced from three databases for all oncology biomarker tests: ClinGen, OncoKB and National Comprehensive Cancer Network (“NCCN”).
Although many 510(k) submissions are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will "clear” the device for marketing.
Although many 510(k) submissions are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will “clear” the device for marketing.
Trademarks and Trade Secrets As of the date of this Annual Report on Form 10-K, our U.S. trademark portfolio contained 22 trademark registrations. We rely upon trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and maintain our competitive position.
Trademarks and Trade Secrets As of the date of this Annual Report on Form 10-K, our U.S. trademark portfolio contained 24 trademark registrations. We rely upon trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and maintain our competitive position.
The commencement or completion of any clinical trial may be delayed, halted, or be inadequate to support approval of a PMA application, for any number of reasons. The 510(k) Clearance Process Under the 510(k) clearance process, the manufacturer must submit to the FDA a premarket notification, demonstrating that the device is “substantially equivalent” to a "predicate” device.
The commencement or completion of any clinical trial may be delayed, halted, or be inadequate to support approval of a PMA application, for any number of reasons. The 510(k) Clearance Process Under the 510(k) clearance process, the manufacturer must submit to the FDA a premarket notification, demonstrating that the device is “substantially equivalent” to a “predicate” device.
In a typical year, we estimate approximately 130,000 patients are diagnosed with invasive CM in the United States, representing an estimated U.S. TAM of approximately $540 million. This estimated annual incidence number is based upon a calculation using data from the U.S.
In a typical year, we estimate approximately 130,000 patients are diagnosed with invasive CM in the U.S., representing an estimated U.S. TAM of approximately $540 million. This estimated annual incidence number is based upon a calculation using data from the U.S.
Item 1. Business. As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires, “Castle Biosciences,” the “Company,” “we”, “us”, and “our” refer to Castle Biosciences, Inc., a Delaware Corporation.
Item 1. Business. As used in this Annual Report on Form 10-K, unless the context indicates or otherwise requires, “Castle Biosciences,” the “Company,” “we,” “us” and “our” refer to Castle Biosciences, Inc., a Delaware Corporation.
If these suppliers can no longer provide us with the materials we need to perform our test services, they do not meet our quality specifications, or we cannot obtain acceptable substitute materials, our business would likely be negatively affected. 13 Table of Contents License Agreement with The Washington University In November 2009, we entered into a license agreement (“the “License Agreement”) with The Washington University in St.
If these suppliers can no longer provide us with the materials we need to perform our test services, they do not meet our quality specifications, or we cannot obtain acceptable substitute materials, our business would likely be negatively affected. 12 Table of Contents License Agreement with The Washington University In November 2009, we entered into a license agreement (the “License Agreement”) with The Washington University in St.
Unless an exemption applies under the FDA's targeted enforcement discretion policies for certain categories of LDTs, each new or significantly modified medical device we seek to commercially distribute in the United States will require either a premarket notification to the FDA requesting authorization for commercial distribution under Section 510(k) of the FD&C Act, also referred to as a 510(k) clearance, de novo classification under Section 513(f)(2) of the FD&C Act, or approval of a PMA application under Section 515(c).
Unless an exemption applies under the FDA’s targeted enforcement discretion policies for certain categories of LDTs, each new or significantly modified medical device we seek to commercially distribute in the U.S. will require either a premarket notification to the FDA requesting authorization for commercial distribution under Section 510(k) of the FD&C Act, also referred to as a 510(k) clearance, de novo classification under Section 513(f)(2) of the FD&C Act, or approval of a PMA application under Section 515(c).
MyPath Melanoma MyPath® Melanoma is our proprietary, diagnostic GEP test offering for use in patients with difficult-to-diagnose melanocytic lesions. Of the two million suspicious pigmented lesions biopsied annually in the United States, we estimate approximately 300,000 of those present a difficult-to-diagnose melanocytic lesion, representing an estimated U.S. TAM of approximately $600 million.
MyPath Melanoma MyPath® Melanoma is our proprietary, diagnostic GEP test for use in patients with difficult-to-diagnose melanocytic lesions. Of the two million suspicious pigmented lesions biopsied annually in the U.S., we estimate approximately 300,000 of those present a difficult-to-diagnose melanocytic lesion, representing an estimated U.S. TAM of approximately $600 million.
ADLT status is not an indication of future coverage. Medicare Reimbursement Rates DecisionDx-Melanoma On May 17, 2019, CMS determined that DecisionDx-Melanoma meets the criteria for “new ADLT” status. Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year.
ADLT status is not an indication of future coverage. 10 Table of Contents Medicare Reimbursement Rates DecisionDx-Melanoma On May 17, 2019, CMS determined that DecisionDx-Melanoma meets the criteria for “new ADLT” status. Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year.
If the manufacturer seeks reclassification to Class II, the reclassification request must include proposed special controls that provide reasonable assurance of safety and effectiveness of the device. The PMA Approval Process Following receipt of a PMA application, the FDA conducts an administrative review to determine whether the application is sufficiently complete to permit a substantive review.
If the manufacturer seeks reclassification to Class II, the reclassification request must include proposed special controls that provide reasonable assurance of safety and effectiveness of the device. 17 Table of Contents The PMA Approval Process Following receipt of a PMA application, the FDA conducts an administrative review to determine whether the application is sufficiently complete to permit a substantive review.
We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, endorsement of or sponsorship of us by, any other companies. 26 Table of Contents
We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, endorsement of or sponsorship of us by, any other companies. 25 Table of Contents
Additionally, we maintain licenses in New York, California, Maryland, 15 Table of Contents Pennsylvania and Rhode Island which require specific licensure for out-of-state laboratories that accept specimens from those states. Because we may receive specimens from residents of the state of New York, we sought and have received approval from NYSDOH.
Additionally, we maintain licenses in New York, California, Maryland, Pennsylvania and Rhode Island which require specific licensure for out-of-state laboratories that accept specimens from those states. Because we may receive specimens from residents of the state of New York, we sought and have received approval from NYSDOH.
Among other things, pursuant to the FD&C Act and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, pre-market review and marketing authorization, product, marketing and promotion, and sales and distribution of medical devices in the United States to ensure that medical devices distributed domestically are reasonably safe and effective for their intended uses.
Among other things, pursuant to the FD&C Act and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, pre-market review and marketing authorization, product, marketing and promotion, and sales and distribution of medical devices in the U.S. to ensure that medical devices distributed domestically are reasonably safe and effective for their intended uses.
They also set forth certain rights that an individual has with respect to 22 Table of Contents his or her PHI maintained by a covered entity, including the right to access or amend certain records containing PHI, or to request restrictions on the use or disclosure of PHI.
They also set forth certain rights that an individual has with respect to his or her PHI maintained by a covered entity, including the right to access or amend certain records containing PHI, or to request restrictions on the use or disclosure of PHI.
This involves the ability to design and efficiently conduct the right clinical studies at the right time; • Research and development investments to document the quality, quantity, consistency and strength of the clinical validity data, the impact our products have on clinical use, and demonstration of net health outcome improvement that reduce health system costs; • Maintaining a strong reputation with the treating clinician by providing consistent, transparent, and clinically relevant information that will improve the appropriate management of their patients; • Ease of use in accessing our products, reimbursement support for our patients and laboratory reports that clearly communicate the clinically relevant data points; • Demonstrated ability to work with, and secure coverage and reimbursement from, governmental and commercial payors; and • Ability to efficiently commercialize both our current and our pipeline products.
This involves the ability to design and efficiently conduct the right clinical studies at the right time; • R&D investments to document the quality, quantity, consistency and strength of the clinical validity data, the impact our products have on clinical use, and demonstration of net health outcome improvement that reduce health system costs; 11 Table of Contents • Maintaining a strong reputation with the treating clinician by providing consistent, transparent and clinically relevant information that will improve the appropriate management of their patients; • Ease of use in accessing our products, reimbursement support for our patients and laboratory reports that clearly communicate the clinically relevant data points; • Demonstrated ability to work with, and secure coverage and reimbursement from, governmental and commercial payors; and • Ability to efficiently commercialize both our current and our pipeline products.
Because these miscellaneous codes do not describe a specific service, the third-party payor claim may need to be examined to determine the service that was provided, whether the service was appropriate and medically necessary and whether payment should be rendered.
Because these miscellaneous codes do not describe a specific service, the claim may need to be examined by a third-party payor to determine what service was provided, whether the service was appropriate and medically necessary and whether payment should be rendered.
The PMA application must provide valid scientific evidence that demonstrates to the FDA’s satisfaction a reasonable assurance of the safety and effectiveness of the device for its intended use. The Investigational Device Process In the United States, all clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption (“IDE”) regulations.
The PMA application must provide valid scientific evidence that demonstrates to the FDA’s satisfaction a reasonable assurance of the safety and effectiveness of the device for its intended use. The Investigational Device Process In the U.S., all clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA’s investigational device exemption (“IDE”) regulations.
The comment period for the draft LCD ended on September 6, 2022. On June 2, 2023, Novitas posted a finalized oncology biomarker LCD pursuant to which the DecisionDx-SCC test would no longer be covered by Medicare effective July 17, 2023.
The comment period for the draft LCD ended on September 6, 2022. 9 Table of Contents On June 2, 2023, Novitas posted a finalized oncology biomarker LCD pursuant to which the DecisionDx-SCC test would no longer be covered by Medicare effective July 17, 2023.
When marketing our testing products outside of the United States, we may be subject to foreign regulatory requirements governing human clinical testing, prohibitions on the import of tissue necessary for us to perform our testing products or restrictions on the export of tissue imposed by countries outside of the United States or the import of tissue into the United States, and marketing approval.
When marketing our testing products outside of the U.S., we may be subject to foreign regulatory requirements governing human clinical testing, prohibitions on the import of tissue necessary for us to perform our testing products or restrictions on the export of tissue imposed by countries outside of the U.S. or the import of tissue into the U.S., and marketing approval.
Since our inception, we have delivered more than 315,000 clinical patient test reports across our product portfolio.
Since our inception, we have delivered more than 419,000 clinical patient test reports across our product portfolio.
This global patent portfolio has filing dates ranging from 2007 to 2024, and therefore are projected to expire between 2027 and 2044, subject to any patent term extension or patent term adjustment that might be available in a particular jurisdiction.
This global patent portfolio has filing dates ranging from 2007 to 2025, and therefore are projected to expire between 2027 and 2045, subject to any patent term extension or patent term adjustment that might be available in a particular jurisdiction.
If it is not, the agency will refuse to file the PMA. If 18 Table of Contents it is, the FDA will accept the application for filing and begin the review. The FDA has 180 days to review a filed PMA application, however, in practice the application review process often exceeds this deadline.
If it is not, the agency will refuse to file the PMA. If it is, the FDA will accept the application for filing and begin the review. The FDA has 180 days to review a filed PMA application, however, in practice the application review process often exceeds this deadline.
While some clinical and pathology criteria have changed over time, this approach has been the standard of care in the United States for many years, and physicians may be unwilling to accept the validity of the published data and adopt our test until this has become incorporated into clinical guideline recommendations from gastrointestinal clinical societies, or other national guidelines.
While some clinical and pathology criteria have evolved over time, this approach has been the standard of care in the U.S. for many years, and physicians may be unwilling to accept the validity of the published data and adopt our test until this has become incorporated into clinical guideline recommendations from gastrointestinal clinical societies, or other national guidelines.
We prioritize and encourage internal growth and professional development of our employees. To encourage employee development, we offer a professional development reimbursement program to eligible employees who attend job-related professional development activities. Corporate and Other Information We were incorporated in Delaware in September 2007. Our principal executive offices are located at 505 S.
We prioritize and encourage internal growth and professional development of our employees. To encourage employee development, we offer a professional development reimbursement program to eligible employees who attend job-related professional development activities. Corporate and Other Information We were incorporated in Delaware in September 2007. Our principal executive offices are currently located at 1500 W.
In addition, we currently face, or may face, competition from companies such as Previse, Interpace Diagnostics, Lucid Diagnostics and other companies. Other companies actively engaged in GERD screening to diagnose BE may also look to develop prognostic tests for patients diagnosed with BE, and these could compete with TissueCypher in the future. In the future, we may face additional competitors.
In addition, we may face competition from companies such as Interpace Diagnostics and other companies. Other companies actively engaged in GERD screening to diagnose BE, such as Lucid Diagnostics and other companies, may also look to develop prognostic tests for patients diagnosed with BE, and these could compete with TissueCypher in the future.
Despite maintaining it has clear regulatory authority over LDTs, the FDA generally has not regulated them and has traditionally exercised enforcement discretion, choosing not to enforce applicable statutory and regulatory requirements. Therefore, most of these tests have neither undergone premarket review nor received FDA clearance, authorization or approval for marketing.
Despite maintaining it has clear regulatory authority over LDTs, the FDA generally has not regulated them and has traditionally exercised enforcement discretion, choosing not to enforce applicable statutory and regulatory requirements. Therefore, most of these tests have neither undergone premarket review nor received FDA clearance, authorization or approval for marketing. We will continue to monitor the FDA’s position.
We survey all new hires 90 days after the start of their employment to solicit feedback on employee engagement. We provide performance reviews at least once per year, with pay raises commensurate with market and performance indicators. Our regrettable turnover remains low at 1.7% for the year ended December 31, 2024.
We survey all new hires 90 days after the start of their employment to solicit feedback on employee engagement. We provide performance reviews at least once per year, with pay raises commensurate with market and performance indicators. Our regrettable turnover remains low at 2.9% for the year ended December 31, 2025.
IDgenetix is designed to provide important genetic information to clinicians to help guide personalized treatment plans for their patients, with the potential to help patients achieve a faster therapeutic response and improve their chances of remission by identifying appropriate medications more efficiently than the standard of care trial-and-error approach.
IDgenetix was designed to provide important genetic information to clinicians to help guide personalized treatment plans for their patients, with the potential to help patients achieve a faster therapeutic response and improve their chances of remission by identifying appropriate medications more efficiently than the standard of care trial-and-error approach. The IDgenetix test was discontinued in May 2025.
While some clinical and pathology criteria have changed over time, this approach has been the standard of 12 Table of Contents care in the United States for many years, and clinicians may be unwilling to accept the validity of the published data and adopt our test until it has become incorporated into national guidelines.
While some clinical and pathology criteria have changed over time, this approach has been the standard of care in the U.S. for many years, and clinicians may be unwilling to accept the validity of the published data and adopt our test until it has become incorporated into national guidelines.
Overview Castle Biosciences is a molecular diagnostics company offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus, uveal melanoma, and in the treatment of mental health conditions. Since our inception in 2008, it has been our vision to transform disease management by keeping people first: patients, clinicians, employees and investors.
Overview Castle Biosciences is a molecular diagnostics company offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus (“BE”), atopic dermatitis (“AD”), uveal melanoma (“UM”). Since our inception in 2008, it has been our vision to transform disease management by keeping people first: patients, clinicians, employees and investors.
Required records and reports are subject to inspection by the FDA. The results of clinical testing may be unfavorable, or, even if the intended safety and efficacy success criteria are achieved, may not be considered sufficient for the FDA to grant marketing approval or clearance of a product.
The results of clinical testing may be unfavorable, or, even if the intended safety and efficacy success criteria are achieved, may not be considered sufficient for the FDA to grant marketing approval or clearance of a product.
DecisionDx-Melanoma DecisionDx-Melanoma is our proprietary risk stratification gene expression profile (“GEP”) test that predicts (i) the likelihood of positive sentinel lymph node and (ii) the risk of metastasis, or recurrence, for patients diagnosed with invasive cutaneous melanoma (“CM”), a deadly skin cancer.
DecisionDx-Melanoma DecisionDx-Melanoma is our proprietary risk stratification gene expression profile (“GEP”) test designed to predict the likelihood of a positive sentinel lymph node and the risk of metastasis or recurrence for patients diagnosed with invasive cutaneous melanoma (“CM”), a deadly skin cancer.
CMS establishes new procedures and continuously evaluates and implements changes to the reimbursement process for billing the Medicare program. To receive reimbursement from third-party payors, we bill our tests using a variety of CPT codes, as defined by the AMA CPT Editorial Panel.
CMS establishes new procedures and continuously evaluates and implements changes to the reimbursement process for billing the Medicare program. To receive reimbursement from third-party payors, we bill our tests using a variety of CPT codes and PLA codes, as defined by the American Medical Association (“AMA”).
To renew our CLIA certificate, we are subject to survey and inspection every two years to assess compliance with program standards. Because our Phoenix, Arizona laboratory is a CAP-accredited laboratory, CMS may defer the survey and inspection to those conducted by CAP. We may also be subject to additional unannounced inspections.
To renew our CLIA certificate, we are subject to survey and inspection every two years to assess compliance with program standards. Because all of our laboratories are CAP-accredited, CMS may defer the survey and inspection to those conducted by CAP. We may also be subject to additional unannounced inspections.
It is unclear how any forthcoming healthcare reform measures of the Trump administration will impact the ACA and our business.
It is unclear how these and other healthcare reform measures of the Trump administration will impact the ACA and our business.
For more information, please see “Risk Factors—Risks Related to Intellectual Property.” Patents and Patent Applications We have developed a global patent portfolio that as of December 31, 2024, is comprised as follows: Number of Applications and Patents Commercial Focus United States International Total Owned Patent Families Methods for predicting risk of metastasis in CM 3 18 21 Methods of diagnosing and treating patients with pigmented skin lesions 1 — 1 Methods of diagnosing and treating patients with SCC 4 22 26 Determining prognosis and treatment based on clinical-pathologic factors and continuous multigene-expression profile scores 1 — 1 Diagnosing and treating AD and/or psoriasis — 1 1 Method and kit for isolating and sequencing nucleic acid from skin samples 1 — 1 Genes and gene signatures for diagnosis and treatment of melanoma 6 29 35 Method for automated tissue analysis 2 3 5 Systems and compositions for diagnosing BE and methods of using same 3 13 16 Methods of predicting progression of BE 2 22 24 Expression profiling using microarrays 1 — 1 Licensed Portfolio from WUSTL Method for predicting risk of metastasis 2 — 2 Compositions and methods for detecting cancer metastasis 2 2 4 Total 28 110 138 Included in the table above are 18 issued U.S. patents and 78 issued international patents.
For more information, please see “Risk Factors—Risks Related to Intellectual Property.” Patents and Patent Applications We have developed a global patent portfolio that as of December 31, 2025, is comprised as follows: Number of Applications and Patents Commercial Focus United States International Total Owned Patent Families Methods for predicting risk of metastasis in CM 5 18 23 Methods of diagnosing and treating patients with pigmented skin lesions 1 — 1 Methods of diagnosing and treating patients with SCC 6 21 27 Diagnosing and treating AD and/or psoriasis 3 1 4 Method and kit for isolating and sequencing nucleic acid from skin samples — 1 1 Diagnosing and treating UM 1 — 1 Genes and gene signatures for diagnosis and treatment of melanoma 6 29 35 Method for automated tissue analysis 2 3 5 Systems and compositions for diagnosing BE and methods of using same 4 13 17 Methods of predicting progression of BE 4 31 35 Expression profiling using microarrays 1 — 1 Licensed Portfolio from WUSTL Method for predicting risk of metastasis 2 — 2 Compositions and methods for detecting cancer metastasis 2 2 4 Total 37 119 156 Included in the table above are 22 issued U.S. patents and 87 issued international patents.
Friendswood Drive, Suite 401, Friendswood, Texas 77456 and our telephone number is (866) 788-9007. Our 25 Table of Contents corporate website address is www.CastleBiosciences.com. Information contained on, or accessible through, our website is not considered part of this Annual Report on Form 10-K or our other filings with the SEC.
Parkwood Ave, Suite 400, Friendswood, Texas 77546 and our telephone number is (866) 788-9007. Our corporate website address is www.CastleBiosciences.com. Information contained on, or accessible through, our website is not considered part of this Annual Report on Form 10-K or our other filings with the SEC.
We consider our relationship with our employees to be good. Employee Engagement We value the unique perspective our employees bring to the organization and encourage open channels of communication. In June 2024, we conducted our fourth annual employee engagement survey to understand what was working well at Castle and what opportunities we had for improvement.
Employee Engagement We value the unique perspective our employees bring to the organization and encourage open channels of communication. In June 2025, we conducted our annual employee engagement survey to understand what was working well at Castle Biosciences and what opportunities we had for improvement.
The law includes a limited number of exceptions, some of which closely align with corresponding AKS exceptions and safe harbors, and others that materially differ.
The law includes a limited number of exceptions, some of which closely align with corresponding AKS exceptions and safe harbors, and others that materially differ. The full scope and interpretation of EKRA remain unclear.
We strive to find members of our team who embody the values of our company. As of December 31, 2024, we had 761 full-time employees. During the year ended December 31, 2024, we added 151 employees to our team, a 25% increase from 2023.
We strive to find members of our team who embody the values of our company. As of December 31, 2025, we had 883 full-time employees. During the year ended December 31, 2025, we added 122 employees to our team, a 16% increase from 2024.
ADLT status determines the process by which the rate is set and is not an indication of Medicare coverage. Effective July 1, 2023 and through March 31, 2024, CMS set the initial period rate equal to the list price of $8,500 per test.
DecisionDx-SCC On June 30, 2023, CMS determined DecisionDx-SCC meets the criteria for “new ADLT” status. ADLT status determines the process by which the rate is set and is not an indication of Medicare coverage. Effective July 1, 2023 and through March 31, 2024, CMS set the initial period rate equal to the list price of $8,500 per test.
In April 2014, Congress passed the Protecting Access to Medicare Act (“PAMA”), which included substantial changes to the way in which clinical laboratory services will be paid under Medicare. Under PAMA, certain laboratories were required to report to CMS private payor payment rates and volumes for their 23 Table of Contents tests.
In April 2014, Congress passed the Protecting Access to Medicare Act (“PAMA”), which included substantial changes to the way in which clinical diagnostic laboratory tests (“CDLTs”) are paid under Medicare. Under PAMA, certain laboratories are required to report to CMS private payor payment rates and volumes for their tests.
For example, in recent years, Congress has worked on legislation to create a novel regulatory framework governing a new category of FDA-regulated products, referred to as in vitro clinical tests (“IVCTs”), which would govern LDTs and would be separate and distinct from existing medical device regulatory framework.
For example, in recent years, Congress has worked on legislation to create a novel regulatory framework governing a new category of FDA-regulated products, referred to as in vitro clinical tests (“IVCTs”), which would govern LDTs and would be separate and distinct from existing medical device regulatory framework. 15 Table of Contents In July 2025, the FDA granted Breakthrough Device designation to our DecisionDx-Melanoma test.
The Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) also imposed annual reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members.
Like the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. 20 Table of Contents The Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) also imposed annual reporting requirements on manufacturers of certain devices, drugs and biologics for certain payments and transfers of value by them and in some cases their distributors to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners) and teaching hospitals, as well as information regarding ownership and investment interests held by physicians and their immediate family members.
These tests are referred to as LDTs. On May 6, 2024, the FDA published a final rule on the regulation of LDTs which amends the FDA's regulations to make it explicit that LDTs are IVDs and regulated as devices under the FD&C Act.
These tests are referred to as LDTs. On May 6, 2024, the FDA published a final rule on the regulation of Laboratory Developed Tests (“LDTs”) which amended the FDA’s regulations to make explicit that LDT’s are devices under the FD&C Act.
If a laboratory is out of compliance with New York statutory or regulatory standards, NYSDOH may suspend, limit, revoke or annul the laboratory’s New York license, censure the holder of the license, or assess civil money penalties. All of our laboratories are inspected and our proprietary tests are approved via NYSDOH.
If a laboratory is out of compliance with New York statutory or regulatory standards, NYSDOH may suspend, limit, revoke or annul the laboratory’s New York license, censure the holder of the license, or assess civil money penalties.
On May 19, 2022, Palmetto finalized an LCD that converted the DecisionDx-Melanoma test-specific LCD to a “foundational” LCD with Noridian issuing the same on June 16, 2022. The final LCDs did not result in any changes in coverage.
Noridian adopted the same coverage policy as Palmetto and also issued an expanded final LCD for DecisionDx-Melanoma, effective December 6, 2020. On May 19, 2022, Palmetto finalized an LCD that converted the DecisionDx-Melanoma test-specific LCD to a “foundational” LCD with Noridian issuing the same on June 16, 2022. The final LCDs did not result in any changes in coverage.
Submission of an IDE will not necessarily result in the ability to commence clinical trials, and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number 17 Table of Contents of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria.
Submission of an IDE will not necessarily result in the ability to commence clinical trials, and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria. 16 Table of Contents The IDE regulations that govern investigational device labeling, prohibit promotion and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.
We continuously assess market response in determining further commercial expansions and commercial team structure. Medical Affairs We also deploy an experienced medical affairs group to assist education of treating clinicians and key opinion leaders, to identify and engage sites for our sponsored clinical studies and to evaluate collaborative study opportunities.
Medical Affairs We also deploy an experienced medical affairs group to assist in the education of treating clinicians and key opinion leaders, to assist in identifying and engaging sites for our sponsored clinical studies and to evaluate collaborative study opportunities. We will continue to assess the market needs in determining medical affairs team structure.
Privacy and Security Laws Health Insurance Portability and Accountability Act Under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) HHS has issued regulations to protect the privacy and provide for the security of protected health information (“PHI”) used or disclosed by certain entities including healthcare providers, such as us.
In many countries outside of the U.S., coverage, pricing and reimbursement approvals are also required. 21 Table of Contents Privacy and Security Laws Health Insurance Portability and Accountability Act Under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) HHS has issued regulations to protect the privacy and provide for the security of protected health information (“PHI”) used or disclosed by certain entities including healthcare providers, such as us.
With this expanded LCD and the accompanying billing and coding articles, we estimate that a significant majority of the DecisionDx-Melanoma tests performed for Medicare patients will meet the coverage criteria. Noridian adopted the same coverage policy as Palmetto and also issued an expanded final LCD for DecisionDx-Melanoma, effective December 6, 2020.
Medicare DecisionDx-Melanoma Palmetto issued a final expanded test-specific LCD for DecisionDx-Melanoma, effective November 22, 2020. With this expanded LCD and the accompanying billing and coding articles, we estimate that a significant majority of the DecisionDx-Melanoma tests performed for Medicare patients will meet the coverage criteria.
The Eliminating Kickbacks in Recovery Act The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) prohibits knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a laboratory; or paying or offering any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a laboratory or in exchange for an individual using the services of that laboratory.
Rather, the government may evaluate such arrangements on a case-by-case basis, taking into account all facts and circumstances. 19 Table of Contents The Eliminating Kickbacks in Recovery Act The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) prohibits knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring a patient or patronage to a laboratory; or paying or offering any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral of an individual to a laboratory or in exchange for an individual using the services of that laboratory.
All of our laboratories are required to be certified by NYSDOH, have a lab director with a specific certificate of qualification and are subject to biennial New York inspections to ensure the lab is compliant with New York licensing standards.
In addition to the NYSDOH lab approval both the Phoenix and Pittsburgh laboratories are both required to have a lab director with a specific certificate of qualification and are subject to biennial New York inspections to ensure the lab is compliant with New York licensing standards.
The numbers of test reports delivered by us and our net revenues during the past five years are presented in the table below: Years Ended December 31, 2024 2023 2022 2021 2020 DecisionDx-Melanoma 36,008 33,330 27,803 20,328 16,232 DecisionDx‑SCC (1) 16,348 11,442 5,967 3,510 485 Diagnostic GEP offering (2) 3,909 3,962 3,561 2,662 73 Dermatologic Total 56,265 48,734 37,331 26,500 16,790 DecisionDx-UM 1,699 1,674 1,711 1,618 1,395 TissueCypher (3) 20,956 9,100 2,128 27 — IDgenetix (4) 17,151 10,921 3,249 — — Grand Total 96,071 70,429 44,419 28,145 18,185 Net Revenues (in thousands) $ 332,069 $ 219,788 $ 137,039 $ 94,085 $ 62,649 (1) On August 31, 2020, we commercially launched our cutaneous SCC proprietary GEP test for use in patients with one or more risk factors.
The numbers of test reports delivered by us and our net revenues during the past five years are presented in the table below: Years Ended December 31, 2025 2024 2023 2022 2021 DecisionDx-Melanoma 39,083 36,008 33,330 27,803 20,328 DecisionDx‑SCC 17,294 16,348 11,442 5,967 3,510 Diagnostic GEP offering (1) 4,288 3,909 3,962 3,561 2,662 Dermatologic Total (2) 60,665 56,265 48,734 37,331 26,500 TissueCypher (3) 39,014 20,956 9,100 2,128 27 DecisionDx-UM 1,769 1,699 1,674 1,711 1,618 IDgenetix (4) 3,605 17,151 10,921 3,249 — Grand Total 105,053 96,071 70,429 44,419 28,145 Net Revenues (in thousands) $ 344,229 $ 332,069 $ 219,788 $ 137,039 $ 94,085 (1) We began offering MyPath Melanoma following our acquisition of the Myriad MyPath Laboratory on May 28, 2021.
Achieving in-network contracts with third-party payors can shorten the time required to receive payments. Implementing our strategy includes our managed care, reimbursement and medical affairs teams educating third-party payors regarding our strong clinical utility and outcomes data, which we believe validates the value of our products and will persuade more third-party payors to provide value-based reimbursement.
Implementing our strategy includes our managed care, reimbursement and medical affairs teams educating third-party payors regarding our strong clinical utility and outcomes data, which we believe validates the value of our products and will increase implementation of value-based reimbursement with more third-party payors.
This process can require a letter of medical necessity and other types of medical documentation from the ordering physician and it can result in a delay in processing the claim, a lower reimbursement amount, or denial of the claim.
This process may require additional medical record documentation from the ordering physician and could result in a delay in processing the claim, a lower reimbursement amount, or denial of the claim.
For those genetic tests we conduct that do not have a dedicated CPT code, tests may be billed under a miscellaneous code for an unlisted molecular pathology procedure.
For those genetic tests we conduct that do not have a dedicated CPT or PLA code, tests may be billed under a non-specific miscellaneous CPT code.
CMS uses this data to calculate a weighted median payment rate for each test, which will be used to establish revised Medicare CLFS reimbursement rates for the test. Laboratories that fail to report the required payment information may be subject to substantial civil penalties. We bill Medicare for our products, and therefore we are subject to reporting requirements under PAMA.
CMS uses this data to calculate a weighted median payment rate for each test, which is used to establish revised Medicare CLFS reimbursement rates for the test. Laboratories that fail to report the required payment information may be subject to substantial civil penalties. PAMA also established a category for ADLTs and specific payment methodologies for qualifying tests.
Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2024 was set using median private payor rate data from January 1, 2022 to June 30, 2022.
MyPath Melanoma On September 6, 2019, MyPath Melanoma was approved as a “new ADLT”. Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2025 was set using median private payor rate data from January 1, 2023 to June 30, 2023.
We may use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the U.S. Securities and Exchange Commission. These disclosures will be included on our website under the “Company—Investors” section.
We may use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation Fair Disclosure promulgated by the SEC. These disclosures will be included on our website under the “Company—Investors” section. This Annual Report on Form 10-K contains references to our trademarks and to trademarks belonging to other entities.
There are approximately four million patients in the U.S. currently diagnosed with BE and approximately 415,000 patients annually undergo an endoscopic biopsy with a subsequent diagnosis of ND, IND or LGD BE, representing an estimated U.S. TAM of approximately $1 billion. As of December 31, 2024, our TissueCypher test is supported by 16 peer-reviewed clinical validation and utility studies.
There are approximately 4 million patients in the U.S. currently diagnosed with BE and approximately 415,000 patients annually undergo an endoscopic biopsy with a subsequent diagnosis of ND, IND or LGD BE, representing an estimated U.S. TAM of approximately $1 billion.
Effective April 1, 2024, we continued receiving reimbursement at a rate of $8,500 per test, set by CMS using median private payor rate data for the period July 1, 2023 and November 30, 2023, and this rate will remain effective through December 31, 2025. 11 Table of Contents TissueCypher TissueCypher is processed in our Pittsburgh, Pennsylvania laboratory under the Medicare jurisdiction managed by Novitas.
Effective April 1, 2024, we continued receiving reimbursement at a rate of $8,500 per test, set by CMS using median private payor rate data for the period July 1, 2023 and November 30, 2023, and this rate remained effective through December 31, 2025 and remains $8,500 per test for 2026.
New PMA applications or PMA supplements may also be required for modifications to any approved diagnostic tests, including modifications to our manufacturing processes, device labeling and device design, based on the findings of post-approval studies.
New PMA applications or PMA supplements may also be required for modifications to any approved diagnostic tests, including modifications to our manufacturing processes, device labeling and device design, based on the findings of post-approval studies. 18 Table of Contents Federal and State Physician Self-Referral Prohibitions We are subject to the federal physician self-referral prohibitions, commonly known as the Stark Law, and to comparable state laws.
We estimate that a significant majority of the DecisionDx-UM tests performed for Medicare patients will meet the coverage criteria. 9 Table of Contents MyPath Melanoma and DiffDx-Melanoma MyPath Melanoma was covered under a test-specific LCD policy through Noridian that became effective in June 2019.
We estimate that a significant majority of the MyPath Melanoma and DiffDx-Melanoma tests performed for Medicare patients will meet the coverage criteria. DecisionDx-UM Palmetto issued a final test-specific LCD for DecisionDx-UM, which became effective in July 2017, and Noridian issued a similar LCD that became effective in September 2017.
Together these restrictions generally prohibit us from billing a patient or any governmental or private payor for certain designated health services, including clinical laboratory services, when the physician ordering the service, or any member of such physician’s immediate family, has a financial interest, such as an ownership or investment interest in or compensation arrangement with us, unless the arrangement meets an exception to the prohibition. 19 Table of Contents Sanctions for a Stark Law violation include the following: • denial of payment for the services provided in violation of the prohibition; • refunds of amounts collected by an entity in violation of the Stark Law; • a civil penalty for each bill or claim for a service arising out of the prohibited referral; • the imposition of up to three times the amounts for each item or service wrongfully claimed; • possible exclusion from federal healthcare programs, including Medicare and Medicaid; and • a civil penalty for each arrangement or scheme that the parties know (or should know) has the principal purpose of circumventing the Stark Law’s prohibition.
Sanctions for a Stark Law violation include the following: • denial of payment for the services provided in violation of the prohibition; • refunds of amounts collected by an entity in violation of the Stark Law; • a civil penalty for each bill or claim for a service arising out of the prohibited referral; • the imposition of up to three times the amounts for each item or service wrongfully claimed; • possible exclusion from federal healthcare programs, including Medicare and Medicaid; and • a civil penalty for each arrangement or scheme that the parties know (or should know) has the principal purpose of circumventing the Stark Law’s prohibition.
For example, the rate for 2024 was set using median private payor rate data from January 1, 2022 to June 30, 2022. Our rate for 2022, 2023 and 2024 was $7,193 per test. Our 2025 rate is $7,193 per test.
For example, the rate for 2025 was set using median private payor rate data from January 1, 2023 to June 30, 2023. Our rate for 2023 through 2025 was $7,193 per test and remains $7,193 per test for 2026. TissueCypher On March 24, 2022, CMS determined TissueCypher met the criteria for “new ADLT” status.
In addition, in certain instances, a patent term can be extended to recapture a period due to delay by the United States Patent and Trademark Office (the “USPTO”) in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period.
Patent and Trademark Office (the “USPTO”) in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period.
Criterion B: The test is cleared or approved by the FDA. Laboratories requesting ADLT status under this criterion are required to submit documentation of premarket approval (“PMA”) or premarket notification from the FDA. 10 Table of Contents All five of our commercially available proprietary MAAA tests have been reviewed by the CMS and have been granted ADLT status.
Criterion B: The test is cleared or approved by the FDA. Laboratories requesting ADLT status under this criterion are required to submit documentation of premarket approval (“PMA”) or premarket notification from the FDA.
Commercial Third-Party Payors We are actively engaged in efforts to achieve broad coverage and reimbursement for our products, followed by contracting with commercial payors. Achieving positive coverage reduces the need for appeals and reduces failures to collect from the patient’s commercial insurance payor. Even with positive coverage decisions, we still experience delays in time to payment.
Achieving positive coverage reduces the need for appeals and reduces failures to collect from the patient’s commercial insurance payor. Even with positive coverage decisions, we still experience delays in time to payment. Achieving in-network contracts with third-party payors can shorten the time required to receive payments.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payor coverage and reimbursement arrangements with third-party payors; • our rate of progress in, and cost of the sales, marketing, coverage and reimbursement activities associated with, establishing adoption of our lead products, DecisionDx-Melanoma, DecisionDx-SCC, and TissueCypher, among our other products; • the cost of expanding our laboratory operations and offerings, including our sales, marketing, coverage and reimbursement efforts; • our rate of progress in, and cost of research and development activities associated with, diagnostic products in research and early development; • the potential cost of, and delays in, the development of new products as a result of changes in regulatory oversight applicable to our products; • acquisitions of businesses, assets, products or technologies; • the duration and effects of elevated inflation; • the effects on our operations of general political and economic conditions and evolving macroeconomic developments, including geopolitical and macroeconomic developments, such as the ongoing conflict between Ukraine by Russia and related sanctions or the Israel-Hamas war, public health crises, economic slowdowns, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, bank failures or other disruptions in the banking system or financing markets, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments; and • the effect of competing technological and market developments.
Biggest changeWe may consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: • increase our sales and marketing efforts for our existing tests and address competitive developments among these or future commercial products; • fund ongoing evidence development for our existing products as well as our pipeline programs; • expand our laboratory facility and related testing capacity; • expand our technologies into other areas within the dermatology, gastroenterology and ophthalmology cancer fields; • acquire, license or invest in technologies; • acquire or invest in complementary businesses or assets; and • finance capital expenditures and general and administrative expenses. 28 Table of Contents Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payor coverage and reimbursement arrangements with third-party payors; • our rate of progress in, and cost of the sales, marketing, coverage and reimbursement activities associated with, establishing adoption of our lead products, DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC, among our other products; • the cost of expanding our laboratory operations and offerings, including our sales, marketing, coverage and reimbursement efforts; • our rate of progress in, and cost of R&D activities associated with, diagnostic products in research and early development; • the potential cost of, and delays in, the development of new products as a result of changes in regulatory oversight applicable to our products; • acquisitions of businesses, assets, products or technologies; • the duration and effects of elevated inflation; • the effects on our operations of general political and economic conditions and evolving macroeconomic developments, including geopolitical and macroeconomic developments, such as the ongoing conflict between Ukraine by Russia and related sanctions or ongoing conflicts in the Middle East, public health crises, economic slowdowns, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, bank failures or other disruptions in the banking system or financing markets, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments; and • the effect of competing technological and market developments.
In order to test specimens from New York, LDTs must be approved by the NYSDOH on a test-by-test basis before they are offered. Our laboratory director and laboratory operations must also be separately qualified and approved through the state of New York. DecisionDx-Melanoma, DecisionDx-CMSeq, DecisionDx-SCC, TissueCypher, MyPath Melanoma, DecisionDx-UM, DecisionDx-PRAME, DecisionDx-UMSeq, IDgenetix and DiffDx-Melanoma have each been approved.
In order to test specimens from New York, LDTs must be approved by the NYSDOH on a test-by-test basis before they are offered. Our laboratory director and laboratory operations must also be separately qualified and approved through the state of New York. DecisionDx-Melanoma, DecisionDx-CMSeq, TissueCypher, DecisionDx-SCC, MyPath Melanoma, DecisionDx-UM, DecisionDx-PRAME, DecisionDx-UMSeq, IDgenetix and DiffDx-Melanoma have each been approved.
Furthermore, government funding of the FDA other government agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.
Furthermore, government funding of the FDA and other government agencies on which our operations may rely is subject to the political process, which is inherently fluid and unpredictable.
Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing in an increasingly stringent fashion, creating uncertainty as to the effective future legal framework. These obligations are subject to varying applications and interpretations, which may be inconsistent or conflicting among jurisdictions, creating complex compliance issues for us and our clients.
Obligations related to data privacy and security (and consumers’ expectations) are quickly changing in an increasingly stringent fashion, creating uncertainty as to the effective future legal framework. These obligations are subject to varying applications and interpretations, which may be inconsistent or conflicting among jurisdictions, creating complex compliance issues for us and our clients.
The full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia, which could conceivably expand into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability, credit availability, and/or supply chain continuity, in both Europe and globally, and has introduced significant uncertainty into global markets.
The full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia, which could conceivably expand into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability, credit availability, and/or supply chain continuity, in both Europe and globally, and has introduced significant uncertainty into global markets.
For example, we currently employ three children and a brother-in-law of Derek J. Maetzold, our President and Chief Executive Officer, two children and a son-in-law of Kristen M. Oelschlager, our Chief Operating Officer, and the son of Tobin W. Juvenal, our Chief Commercial Officer, in each case in non-officer positions.
For example, we currently employ three children, son-in-law and a brother-in-law of Derek J. Maetzold, our President and Chief Executive Officer, two children and a son-in-law of Kristen M. Oelschlager, our Chief Operating Officer, and the son of Tobin W. Juvenal, our Chief Commercial Officer, in each case in non-officer positions.
The types of situations in which we may become a party to such litigation or proceedings include: • we may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our products or technologies do not infringe those third parties’ patents; • we may participate at substantial cost in International Trade Commission proceedings to abate importation of products that would compete unfairly with our products or technologies; • if a competitor files patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; 54 Table of Contents • if third parties initiate litigation claiming that our products or technologies infringe their patent or other intellectual property rights, we will need to defend against such proceedings; • if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their products, services, or technologies do not infringe our patents or patents licensed to us, we will need to defend against such proceedings; • we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our products and technologies; and • if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our products or technologies infringe or misappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we would need to defend against such proceedings.
The types of situations in which we may become a party to such litigation or proceedings include: • we may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our products or technologies do not infringe those third parties’ patents; 58 Table of Contents • we may participate at substantial cost in International Trade Commission proceedings to abate importation of products that would compete unfairly with our products or technologies; • if a competitor files patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third-party with a dominant patent position; • if third parties initiate litigation claiming that our products or technologies infringe their patent or other intellectual property rights, we will need to defend against such proceedings; • if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their products, services, or technologies do not infringe our patents or patents licensed to us, we will need to defend against such proceedings; • we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our products and technologies; and • if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our products or technologies infringe or misappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we would need to defend against such proceedings.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or adequately mitigate liabilities or damages with respect to claims, costs, expenses, litigation, fines, penalties, business loss, information loss, regulatory actions or material adverse impacts arising out of our privacy and security practices, processing or security incidents we may experience, or that such coverage will continue to be available on commercially reasonable terms or at all.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or adequately mitigate liabilities or damages with respect to claims, costs, expenses, litigation, fines, penalties, business loss, information loss, regulatory actions or material adverse impacts arising out of our privacy and security practices, processing or security incidents we may experience, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay claims.
Even if we prevail against an infringer in a U.S. district court or foreign trial-level court, there is always the risk that the infringer will file an appeal and the initial court judgment will be overturned at the appeals court and/or that an adverse decision will be issued by the appeals court relating to the validity or enforceability of our patents.
Even if we prevail against an infringer in a U.S. district court or foreign trial-level court, there is always the risk that the infringer will file an appeal and the initial court judgment will be overturned by the appeals court and/or that an adverse decision will be issued by the appeals court relating to the validity or enforceability of our patents.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders; (iii) any action or proceeding asserting a claim against us or any of our current or former directors, officers or other employees arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or amended and restated bylaws; (iv) any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; (v) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants; provided these provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders; (iii) any action or proceeding asserting a claim against us or any of our current or former directors, officers or other employees arising out of or pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or amended and restated bylaws; (iv) any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; (v) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants; provided these provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.
The following examples are illustrative: • others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology, but that are not covered by the claims of the patents that we own or control, assuming such patents have issued or do issue; • we or our licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; • we or our licensors or any future strategic partners might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or have exclusively licensed may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive tests for sale in our major commercial markets; • third parties performing manufacturing or testing for us using our products or technologies could use the intellectual property of others without obtaining a proper license; • parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; • we may not develop or in-license additional proprietary technologies that are patentable; • we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and • the patents of others may have an adverse effect on our business.
The following examples are illustrative: • others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology, but that are not covered by the claims of the patents that we own or control, assuming such patents have issued or do issue; • we or our licensors or any future strategic partners might not have been the first to conceive or reduce to practice the inventions covered by the issued patents or pending patent applications that we own or have exclusively licensed; • we or our licensors or any future strategic partners might not have been the first to file patent applications covering certain of our inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our pending patent applications will not lead to issued patents; • issued patents that we own or have exclusively licensed may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; • our competitors might conduct R&D activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive tests for sale in our major commercial markets; • third parties performing manufacturing or testing for us using our products or technologies could use the intellectual property of others without obtaining a proper license; • parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property; • we may not develop or in-license additional proprietary technologies that are patentable; • we may not be able to obtain and maintain necessary licenses on commercially reasonable terms, or at all; and • the patents of others may have an adverse effect on our business.
We do not intend to pay dividends for the foreseeable future. We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future.
Our employees and personnel use generative AI technologies to perform their work, and the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws regulating generative AI.
Our employees and personnel use generative AI technologies to perform their work, and the disclosure and use of personal data in generative AI technologies is subject to various privacy laws and other privacy obligations. Governments have passed and are likely to pass additional laws and regulations regulating generative AI.
Failure in any one of these areas could make it difficult for us to meet market expectations for our products and could damage our reputation and the prospects for our business. For example, we experienced initial operational challenges in expanding business for our TissueCypher test.
Failure in any one of these areas could make it difficult for us to meet market expectations for our products and could damage our reputation and the prospects for our business. For example, we experienced operational challenges in expanding business for our TissueCypher test.
Several factors make the billing process complex, including: • differences between the billing rates and reimbursement rates for our products; • compliance with complex federal and state regulations related to billing government healthcare programs, including Medicare, Medicaid, Veterans Health Administration and TRICARE; • risk of government audits related to billing; • disputes among payors as to which party is responsible for payment; • differences in coverage and information and billing requirements among payors, including the need for prior authorization and/or advanced notification; • the effect of patient co-payments or co-insurance and our ability to collect such payments from patients; • changes to billing codes used for our products; • changes to requirements related to our current or future clinical studies, including our registry studies, which can affect eligibility for payment; 32 Table of Contents • ongoing monitoring provisions of LCDs for our products, which can affect the circumstances under which a claim would be considered medically necessary; • incorrect or missing billing information; and • the resources required to manage the billing and claims appeals process.
Several factors make the billing process complex, including: • differences between the billing rates and reimbursement rates for our products; • compliance with complex federal and state regulations related to billing government healthcare programs, including Medicare, Medicaid, Veterans Health Administration and TRICARE; • risk of government audits related to billing; • disputes among payors as to which party is responsible for payment; • differences in coverage and information and billing requirements among payors, including the need for prior authorization and/or advanced notification; • the effect of patient co-payments or co-insurance and our ability to collect such payments from patients; • changes to billing codes used for our products; • changes to requirements related to our current or future clinical studies, including our registry studies, which can affect eligibility for payment; • ongoing monitoring provisions of LCDs for our products, which can affect the circumstances under which a claim would be considered medically necessary; • incorrect or missing billing information; and • the resources required to manage the billing and claims appeals process.
We believe our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our operations for at least the next 12 months.
We believe our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our planned operations for at least the next 12 months.
We anticipate there will continue to be proposals by legislators at both the federal and state levels, regulators and commercial third-party payors to reduce costs while expanding individual healthcare benefits.
We further anticipate there will continue to be proposals by legislators at both the federal and state levels, regulators and commercial third-party payors to reduce costs while expanding individual healthcare benefits.
Although the FDA has statutory authority to provide reasonable assurance that medical devices are safe and effective for their intended uses, the FDA has generally exercised its enforcement discretion and not enforced applicable regulations with respect to in vitro diagnostics (“IVD”) that are intended for clinical use and are designed, manufactured and used within a single laboratory that is certified under CLIA and meets the regulatory requirements under CLIA to perform high-complexity testing.
Although the FDA has statutory authority to provide reasonable assurance that medical devices are safe and effective for their intended uses, the FDA has generally exercised its enforcement discretion and not enforced applicable regulations with respect to in vitro diagnostics (“IVDs”) that are intended for clinical use and are designed, manufactured and used within a single laboratory that is certified under CLIA and meets the regulatory requirements under CLIA to perform high-complexity testing.
The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction. 71 Table of Contents Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction. 77 Table of Contents Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Failure to comply with applicable clinical laboratory licensure requirements may result in a range of enforcement actions, including suspension, limitation or revocation of our CLIA accreditation and/or state licenses, imposition of a directed plan of action, onsite monitoring, civil monetary penalties, criminal sanctions and revocation of the laboratory’s approval to receive Medicare and Medicaid payment for its services, as well as significant adverse publicity.
Failure to comply with applicable clinical laboratory licensure requirements may result in a range of enforcement actions, including suspension, limitation or revocation of our CLIA certification and/or state licenses, imposition of a directed plan of action, onsite monitoring, civil monetary penalties, criminal sanctions and revocation of the laboratory’s approval to receive Medicare and Medicaid payment for its services, as well as significant adverse publicity.
Among other things, our amended and restated certificate of incorporation and amended and restated bylaws: • permit our board of directors to issue up to 10,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate (including the right to approve an acquisition or other change in our control); • provide that the authorized number of directors may be changed only by resolution of the board of directors; 70 Table of Contents • provide that the board of directors or any individual director may only be removed with cause and the affirmative vote of the holders of at least 66-2/3% of the voting power of all of our then outstanding common stock; • provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • divide our board of directors into three classes; • require that any action to be taken by our stockholders must be effected at a duly called annual or special meetings of stockholders and not be taken by written consent; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and also specify requirements as to the form and content of a stockholder’s notice; • do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); • provide that special meetings of our stockholders may be called only by the chairperson of the board, our Chief Executive Officer or by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors; • provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders; (iii) any action or proceeding asserting a claim against us or any of our current or former directors, officers or other employees, arising out of or pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws; (iv) any action or proceeding to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws; (v) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants; provided these provisions of our amended and restated certificate of incorporation and amended and restated bylaws will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction; and • provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision.
Among other things, our amended and restated certificate of incorporation and amended and restated bylaws: • permit our board of directors to issue up to 10,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate (including the right to approve an acquisition or other change in our control); • provide that the authorized number of directors may be changed only by resolution of the board of directors; • provide that the board of directors or any individual director may only be removed with cause and the affirmative vote of the holders of at least 66-2/3% of the voting power of all of our then outstanding common stock; • provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • divide our board of directors into three classes; • require that any action to be taken by our stockholders must be effected at a duly called annual or special meetings of stockholders and not be taken by written consent; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and also specify requirements as to the form and content of a stockholder’s notice; • do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose); • provide that special meetings of our stockholders may be called only by the chairperson of the board, our Chief Executive Officer or by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors; and 76 Table of Contents • provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on our behalf; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders; (iii) any action or proceeding asserting a claim against us or any of our current or former directors, officers or other employees, arising out of or pursuant to any provision of the General Corporation Law of the State of Delaware (the “DGCL”), our amended and restated certificate of incorporation or our amended and restated bylaws; (iv) any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; (v) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim against us or any of our directors, officers or other employees governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants; provided these provisions of our amended and restated certificate of incorporation will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction; and • provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S. shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision in our amended and restated certificate of incorporation.
This preference for U.S. industry may be waived by the federal agency that provided the funding if the owner or assignee of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commercially feasible.
This preference for U.S. industry may be waived by the federal agency that provided the funding if the owner or assignee of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the U.S. or that under the circumstances domestic manufacture is not commercially feasible.
Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time. Patents have a limited lifespan, and the protection patents afford is limited. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
Patent terms may be inadequate to protect our competitive position on our products for an adequate amount of time. Patents have a limited lifespan, and the protection patents afford is limited. In the U.S., if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date.
The law includes a limited number of exceptions, some of which closely align with corresponding federal AKS exceptions and safe harbors, and others that materially differ; • HIPAA, which, among other things, imposes criminal liability for executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, in connection with the delivery of or payment for healthcare benefits, items or services.
The law includes a limited number of exceptions, some of which closely align with corresponding federal AKS exceptions and safe harbors, and others that materially differ; 49 Table of Contents • HIPAA, which, among other things, imposes criminal liability for executing or attempting to execute a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, in connection with the delivery of or payment for healthcare benefits, items or services.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from government funded healthcare programs, such as Medicare, Medicaid and other federal healthcare programs, contractual 60 Table of Contents damages, reputational harm, diminished profits and future earnings, additional integrity reporting and oversight obligations, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from government funded healthcare programs, such as Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, additional integrity reporting and oversight obligations, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Like the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • HIPAA, as amended by HITECH, and their implementing regulations, which imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon entities subject to the law, such as health plans, healthcare clearinghouses and certain healthcare providers, known as 46 Table of Contents covered entities, and their respective business associates, individuals or entities that perform services for them that involve individually identifiable health information as well as their covered subcontractors.
Like the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • HIPAA, as amended by HITECH, and their implementing regulations, which imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon entities subject to the law, such as health plans, healthcare clearinghouses and certain healthcare providers, known as covered entities, and their respective business associates, individuals or entities that perform services for them that involve individually identifiable health information as well as their covered subcontractors.
Intellectual property rights that have been in-licensed pursuant to the License Agreement with WUSTL have been generated through the use of U.S. government funding, and are therefore subject to certain federal regulations. As a result, the United States federal government may retain certain rights to intellectual property embodied in our current or future product candidates under the Bayh-Dole Act.
Intellectual property rights that have been in-licensed pursuant to the License Agreement with WUSTL have been generated through the use of U.S. government funding, and are therefore subject to certain federal regulations. As a result, the U.S. federal government may retain certain rights to intellectual property embodied in our current or future product candidates under the Bayh-Dole Act.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until approximately 18 months after filing or, in some cases (e.g., U.S. applications for which a request not to publish has been filed), not until such patent applications issue as patents.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until approximately 18 months after filing or, in some cases (e.g., U.S. applications for which a request not to publish has been filed), not until such patent applications issue as patents.
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the U.S.
Regardless of merit or eventual outcome, product liability claims may result in: • decreased demand for our current tests, or any tests that we may develop, and the inability to commercialize such tests; • injury to our reputation and significant negative media attention; • reluctance of experts willing to conduct our clinical studies; • initiation of investigations by regulators; • significant costs to defend the related litigation and diversion of management’s time and our resources; 65 Table of Contents • substantial monetary awards to study subjects or patients; • product recalls, withdrawals or labeling, or marketing or promotional restrictions; and • loss of revenue.
Regardless of merit or eventual outcome, product liability claims may result in: • decreased demand for our current tests, or any tests that we may develop, and the inability to commercialize such tests; • injury to our reputation and significant negative media attention; • reluctance of experts willing to conduct our clinical studies; • initiation of investigations by regulators; • significant costs to defend the related litigation and diversion of management’s time and our resources; • substantial monetary awards to study subjects or patients; • product recalls, withdrawals or labeling, or marketing or promotional restrictions; and • loss of revenue.
While we also derive revenue from our other tests, we expect that the majority of our revenue for the next several years will be derived from sales of our DecisionDx-Melanoma and TissueCypher tests. Revenues from our DecisionDx-SCC test represented a significant portion of our 2024 revenues but are not expected to be so in our 2025 operating results.
While we also derive revenue from our other tests, we expect that the majority of our revenue for the next several years will be derived from sales of our DecisionDx-Melanoma and TissueCypher tests. Revenues from our DecisionDx-SCC test represented a significant portion of our 2025 revenues but are not expected to be so in our 2026 operating results.
For example, during 2022, the SEC adopted new rules covering pay versus performance disclosures, "clawback" policies, and insider trading plans. Future changes in regulations and disclosure obligations may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.
For example, during 2022, the SEC adopted new rules covering pay versus performance disclosures, “clawback” policies, and insider trading plans. Future changes in regulations and disclosure obligations may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.
The term ‘‘remuneration’’ has been broadly interpreted to include anything of value, such as specimen collection materials or test kits. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, however these are drawn narrowly.
The term “remuneration” has been broadly interpreted to include anything of value, such as specimen collection materials or test kits. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, however these are drawn narrowly.
A security incident could disrupt our ability (and that of the third parties upon whom we rely) to provide our services. We have in the past and may in the future expend significant resources or modify our business activities (including our clinical research activities) to try to protect against security incidents.
A security incident or other compromise could disrupt our ability (and that of the third parties upon whom we rely) to provide our services. We have in the past and may in the future expend significant resources or modify our business activities (including our clinical research activities) to try to protect against security incidents.
For example, the California Consumer Privacy Act of 2018, as amended (“CCPA”), applies to personal data of consumers, business representatives and employees who are California residents and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
For example, the California Consumer Privacy Act of 2018, as amended (“CCPA”), applies to personal data of consumers, business representatives and employees who are California residents and requires businesses subject to the CCPA to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
From time to time, we may consider strategic opportunities and engage in transactions such as acquisitions of businesses, assets, products or technologies, as well as technology licenses or investments in complementary businesses. For example, in December 2021 and April 2022, we completed the acquisitions of Cernostics and AltheaDx, respectively.
From time to time, we may consider strategic opportunities and engage in transactions such as acquisitions of businesses, assets, products or technologies, as well as technology licenses or investments in complementary businesses. For example, in December 2021, April 2022 and May 2025 we completed the acquisitions of Cernostics, AltheaDx and Previse, respectively.
Our estimates of the TAM for DecisionDx-Melanoma, DecisionDx-SCC, TissueCypher, MyPath Melanoma, DecisionDx-UM and IDgenetix tests are based on a number of internal and third-party estimates, including, without limitation, the annual rate of patients with the applicable indications, the list price of our products relative to the reimbursement we expect to receive from third-party payors and the assumed prices at which we can sell our products in markets that have not been established.
Our estimates of the TAM for DecisionDx-Melanoma, TissueCypher, AdvanceAD-Tx, DecisionDx-SCC, MyPath Melanoma, and DecisionDx-UM tests are based on a number of internal and third-party estimates, including, without limitation, the annual rate of patients with the applicable indications, the list price of our products relative to the reimbursement we expect to receive from third-party payors and the assumed prices at which we can sell our products in markets that have not been established.
Any acquisition, integration or expansion of our business may cause actual results may differ materially from our plans and expectations.
Any acquisition, integration or expansion of our business may cause actual results to differ materially from our plans and expectations.
Some of our patents or patent applications (including licensed patents) have been, are being or may be challenged at a future point in time in an opposition, nullification, derivation, reexamination, inter partes review, post-grant review or interference action in court or before patent offices or similar proceedings for a given period after allowance or 53 Table of Contents grant, during which time third parties can raise objections against such grant.
Some of our patents or patent applications (including licensed patents) have been, are being or may be challenged at a future point in time in an opposition, nullification, derivation, reexamination, inter partes review, post-grant review or interference action in court or before patent offices or similar proceedings for a given period after allowance or grant, during which time third parties can raise objections against such grant.
We cannot specify with any certainty the particular uses of working capital, but we currently expect such uses will include: funding selling and marketing activities, including expansion of our sales force to support the ongoing commercialization of current and future products; research and development related to the continued support of our current products, as well as the development of our product pipeline; and other general corporate purposes, including acquisitions and the costs associated with being a public company.
We cannot specify with any certainty the particular uses of working capital, but we currently expect such uses will include: funding selling and marketing activities, including expansion of our sales force to support the ongoing commercialization of current and future products; R&D related to the continued support of our current products, as well as the development of our product pipeline; and other general corporate purposes, including acquisitions and the costs associated with being a public company.
Any sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing clinical laboratory licensure or our failure to renew our CLIA accreditation, or a state or foreign license, could have a material adverse effect on our business, financial condition and results of operations.
Any sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing clinical laboratory licensure or our failure to renew our CLIA certification, or a state or foreign license, could have a material adverse effect on our business, financial condition and results of operations.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and the UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and the UK to the U.S. in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the U.S., or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
Risks Related to Our Business Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, DecisionDx-SCC and TissueCypher tests, and we will need to generate sufficient revenue from these products and other products to grow our business. Our revenue in 2024 was primarily derived from the sale of our DecisionDx-Melanoma, DecisionDx-SCC and TissueCypher tests.
Risks Related to Our Business Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC tests, and we will need to generate sufficient revenue from these products and other products to grow our business. Our revenue in 2025 was primarily derived from the sale of our DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC tests.
See “—Risks Related to Our Business—Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, DecisionDx-SCC and TissueCypher tests, and we will need to generate sufficient revenue from these products and other products to grow our business.” We may also incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in this Annual Report on Form 10‑K, adoption of our products, coverage of and reimbursement rates for our products from third-party payors, and future research and development activities.
See “—Risks Related to Our Business—Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC tests, and we will need to generate sufficient revenue from these products and other products to grow our business.” We may also incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in this Annual Report on Form 10‑K, adoption of our products, coverage of and reimbursement rates for our products from third-party payors, and future R&D activities.
In these situations, the third-party payor will typically notify us of their decision and then offset whatever amount they determine they overpaid against amounts they owe us on 38 Table of Contents current claims. We cannot predict when, or how often, a third-party payor might engage in these reviews and we may not be able to dispute these retroactive adjustments.
In these situations, the third-party payor will typically notify us of their decision and then offset whatever amount they determine they overpaid against amounts they owe us on current claims. We cannot predict when, or how often, a third-party payor might engage in these reviews and we may not be able to dispute these retroactive adjustments.
Further, this increased focus on ESG issues may result in new regulations and/or third-party requirements that could adversely impact our business, or certain shareholders 50 Table of Contents reducing or eliminating their holdings of our stock. Additionally, an allegation or perception that we have not taken sufficient action in these areas could negatively harm our reputation.
Further, this increased focus on ESG issues may result in new regulations and/or third-party requirements that could adversely impact our business, or certain shareholders reducing or eliminating their holdings of our stock. Additionally, an allegation or perception that we have not taken sufficient action in these areas could negatively harm our reputation.
Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations. 66 Table of Contents Requirements associated with being a public company, including those related to our status as an accelerated filer and no longer qualifying as a smaller reporting company, have increased our costs and diverted significant company resources and management attention.
Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations. Requirements associated with being a public company, including those related to our status as an accelerated filer and no longer qualifying as a smaller reporting company, have increased our costs and diverted significant company resources and management attention.
We may also be subject to liability for errors in, a misunderstanding of or inappropriate reliance upon, the information we provide in the ordinary course of our business activities. If we cannot successfully defend ourselves against claims that our products caused injury or otherwise failed to function properly, we could incur substantial liabilities.
We may also be subject to liability for errors in, a misunderstanding of or inappropriate reliance upon, the information we provide in the ordinary course of our business activities. 70 Table of Contents If we cannot successfully defend ourselves against claims that our products caused injury or otherwise failed to function properly, we could incur substantial liabilities.
In addition, the U.S. government requires that any products embodying any of these inventions or produced through the use of any of these inventions be manufactured substantially in the United States, and the License Agreement requires that we comply with this requirement.
In addition, the U.S. government requires that any products embodying any of these inventions or produced through the use of any of these inventions be manufactured substantially in the U.S., and the License Agreement requires that we comply with this requirement.
Preparing for and complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources). These obligations have in the past and may in the future necessitate changes to our information technologies, systems, and practices and to those of any third party that processes personal data on our behalf.
Preparing for and complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources). 53 Table of Contents These obligations have in the past and may in the future necessitate changes to our information technologies, systems, and practices and to those of any third-party that processes personal data on our behalf.
Remote work has increased risks to our information technology systems and data, as our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations. We manage and maintain our applications and information utilizing a combination of on-site systems, managed data centers, and cloud-based data centers.
Remote work poses risks to our information technology systems and data, as our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations. We manage and maintain our applications and information utilizing a combination of on-site systems, managed data centers, and cloud-based data centers.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: federal laws and regulations or those of comparable foreign regulatory authorities, including those laws that require the reporting of true, complete and accurate information; manufacturing standards; federal and state health and data privacy, security, fraud and abuse, government price reporting, transparency reporting requirements, and other healthcare laws and regulations in the United States and abroad; sexual harassment and other workplace misconduct; or laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: federal laws and regulations or those of comparable foreign regulatory authorities, including those laws that require the reporting of true, complete and accurate information; manufacturing standards; federal and state health and data privacy, security, fraud and abuse, government price reporting, transparency reporting requirements, and other healthcare laws and regulations in the U.S. and abroad; sexual harassment and other workplace misconduct; or laws that require the true, complete and accurate reporting of financial information or data.
These billing complexities, and the related uncertainty in obtaining payment for our products, could negatively affect our revenue and cash flow, our ability to achieve profitability, and the consistency and comparability of our results of operations. In addition to the complexities noted above, we rely upon a third-party software application in the administration of our billing and collection process.
These billing complexities, and the related uncertainty in obtaining payment for our products, could negatively affect our revenue and cash flow, our ability to achieve profitability, and the consistency and comparability of our results of operations. 32 Table of Contents In addition to the complexities noted above, we rely upon a third-party software application in the administration of our billing and collection process.
We could be adversely affected if regulatory agencies interpret our financial relationships with providers who may influence the ordering of and use of our products to be in violation of applicable laws. 47 Table of Contents The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform.
We could be adversely affected if regulatory agencies interpret our financial relationships with providers who may influence the ordering of and use of our products to be in violation of applicable laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform.
For example, as described further in “Item 3. Legal Proceedings,” on February 1, 2024 we received a subpoena from United States Department of Health and Human Services Office of Inspector General. This inquiry, and any potential resulting claim asserted against us, with or without merit, could be time-consuming, expensive to address and divert management’s attention and other resources.
For example, as described further in “Item 3. Legal Proceedings,” on February 1, 2024 we received a subpoena from U.S. Department of Health and Human Services Office of Inspector General. This inquiry, and any potential resulting claim asserted against us, with or without merit, could be time-consuming, expensive to address and divert management’s attention and other resources.
Accordingly, because of the inherent 69 Table of Contents limitations in our control system, misstatements due to error or fraud may occur and not be detected. In addition, we do not have a risk management program or processes or procedures for identifying and addressing risks to our business in other areas.
Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected. In addition, we do not have a risk management program or processes or procedures for identifying and addressing risks to our business in other areas.
In addition, as a Delaware corporation, we are subject to Section 203 of the Delaware General Corporation Law. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time.
In addition, as a Delaware corporation, we are subject to Section 203 of the DGCL. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • our operating performance and the performance of other similar companies; • our success in marketing and selling our products; • our ability to achieve guideline inclusion for our products; • reimbursement determinations by third-party payors, including MACs, and reimbursement rates for our products; • changes in our projected operating results that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts that elect to follow our common stock; • regulatory or legal developments in the United States and other countries; • the level of expenses related to product development and clinical studies for our products; • our ability to achieve product development goals in the timeframes we announce; • announcements of clinical study results, regulatory developments, acquisitions, strategic alliances or significant agreements by us or by our competitors; • the success or failure of our efforts to acquire, license or develop additional tests; • recruitment or departure of key personnel; • general economic conditions and market conditions specific to our industry; • interest rates and the rate of inflation; • changes in trade and tariff policies; • the extent and duration of the impacts on our operations of general political and economic conditions, including the Israel-Hamas war, the ongoing conflict between Ukraine and Russia, economic slowdowns, recessions or market corrections, the duration and effects of elevated inflation, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments; • trading activity by a limited number of stockholders who together beneficially own a significant percentage of our outstanding common stock; 68 Table of Contents • the size of our market float; and • any other factors discussed in this Annual Report on Form 10-K.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • our operating performance and the performance of other similar companies; • our success in marketing and selling our products; • our ability to achieve guideline inclusion for our products; • reimbursement determinations by third-party payors, including MACs, and reimbursement rates for our products; 73 Table of Contents • changes in our projected operating results that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts that elect to follow our common stock; • regulatory or legal developments in the U.S. and other countries; • the level of expenses related to product development and clinical studies for our products; • our ability to achieve product development goals in the timeframes we announce; • announcements of clinical study results, regulatory developments, acquisitions, strategic alliances or significant agreements by us or by our competitors; • the success or failure of our efforts to acquire, license or develop additional tests; • recruitment or departure of key personnel; • general economic conditions and market conditions specific to our industry; • interest rates and the rate of inflation; • changes in trade and tariff policies; • the extent and duration of the impacts on our operations of general political and economic conditions, including ongoing conflicts in the Middle East, the ongoing conflict between Ukraine and Russia, economic slowdowns, recessions or market corrections, the duration and effects of elevated inflation, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments; • trading activity by a limited number of stockholders who together beneficially own a significant percentage of our outstanding common stock; • the size of our market float; and • any other factors discussed in this Annual Report on Form 10-K.
Since 2016, there have been efforts to repeal, replace, or amend all or part of the ACA. Further, there have been a number of health reform measures by the previous administration that have impacted the ACA.
There have been efforts to repeal, replace, or amend all or part of the ACA. Further, there have been a number of health reform measures by the previous administration that have impacted the ACA.
Failure or perceived failure to comply with our privacy and security obligations could result in significant consequences, including but not limited to government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar), litigation (including class-action claims) and mass arbitration demands, additional reporting requirements and/or oversight, bans on processing personal data, and orders to destroy or not use personal data.
Failure or perceived failure to comply with our privacy and security obligations could result in significant consequences, including but not limited to government enforcement actions (e.g., investigations, fines, penalties, audits, inspections and similar), litigation (including class-action claims) and mass arbitration demands, additional reporting requirements and/or oversight, bans on processing personal data, orders to destroy or not use personal data, and imprisonment of company officials.
Such consequences may disrupt our operations (including our ability to conduct our analyses, provide test results, bill payors or patients, process claims and appeals, provide customer assistance, conduct research and development activities, collect, process, and prepare company financial information, provide information about our products and other patient and physician education and outreach efforts through our website, and manage the administrative aspects of our business), negatively impact our ability to grow our business, and others.
Such consequences may disrupt our operations (including our ability to conduct our analyses, provide test results, bill payors or patients, process claims and appeals, provide customer assistance, conduct R&D activities, collect, process, and prepare company financial information, provide information about our products and other patient and physician education and outreach efforts through our website, and manage the administrative aspects of our business), negatively impact our ability to grow our business, and others.
For applications filed after March 15, 2013 that do not claim the benefit of applications filed before that date, the AIA transitioned the United States from a first to invent system to a first-inventor-to-file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention.
For applications filed after March 15, 2013 that do not claim the benefit of applications filed before that date, the AIA transitioned the U.S. from a first to invent system to a first-inventor-to-file system in which, assuming that the other statutory requirements are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third-party was the first to invent the claimed invention.
Among other things, pursuant to the FD&C Act and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, premarket review and marketing authorization, marketing and promotion, and sales and distribution of medical devices in the United States to provide reasonable assurance that medical products distributed domestically are safe and effective for their intended uses.
Among other things, pursuant to the FD&C Act and its implementing regulations, the FDA regulates the research, testing, manufacturing, safety, labeling, storage, recordkeeping, premarket review and marketing authorization, marketing and promotion, and sales and distribution of medical devices in the U.S. to provide reasonable assurance that medical products distributed domestically are safe and effective for their intended uses.
While we have a business continuity plan in place, and intentionally built out two clinical laboratories in adjacent buildings in Phoenix, Arizona to not only support our growth but to provide certain operational redundancy, our facilities and the equipment we use to perform our testing and research and development could be unavailable or costly and time-consuming to repair or replace.
While we have a business continuity plan in place, and intentionally built out two clinical laboratories in adjacent buildings in Phoenix, Arizona to not only support our growth but to provide certain operational redundancy, our facilities and the equipment we use to perform our testing and R&D could be unavailable or costly and time-consuming to repair or replace.
Therefore, the validity, enforceability and scope of our patents in the United States and other countries cannot be predicted with certainty and, as a result, any patents that we own or license may not provide sufficient protection against our competitors. Furthermore, if third parties bring these proceedings against our patents, we could experience significant costs and management distraction.
Therefore, the validity, enforceability and scope of our patents in the U.S. and other countries cannot be predicted with certainty and, as a result, any patents that we own or license may not provide sufficient protection against our competitors. Furthermore, if third parties bring these proceedings against our patents, we could experience significant costs and management distraction.
Additionally, our ability to successfully integrate, manage and derive financial and other benefits from any acquired business, asset, product or technology cannot be assured given our limited historical experience with such transactions. 62 Table of Contents Our ability to use net operating loss carryforwards and certain other tax attributes to offset future taxable income and taxes may be subject to limitations.
Additionally, our ability to successfully integrate, manage and derive financial and other benefits from any acquired business, asset, product or technology cannot be assured given our limited historical experience with such transactions. Our ability to use net operating loss carryforwards and certain other tax attributes to offset future taxable income and taxes may be subject to limitations.
Further, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted additional rules and regulations in these areas, such as mandatory ‘‘say on pay’’ voting requirements. Stockholder activism, the current political environment, and the high level of government intervention and regulatory reform have led to substantial new regulations and disclosure obligations.
Further, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC has adopted additional rules and regulations in these areas, such as mandatory “say on pay” voting requirements. Stockholder activism, the current political environment, and the high level of government intervention and regulatory reform have led to substantial new regulations and disclosure obligations.
As we add new tests and services, we will face many of these same competitive risks for these new tests. Impairment of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition.
As we add new tests and services, we will face many of these same competitive risks for these new tests. 36 Table of Contents Impairment of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition.
You should not rely on our past results as indicative of our future performance. 28 Table of Contents In addition, a significant portion of our operating expense is relatively fixed in nature, and planned expenditures are based in part on expectations regarding future revenue.
You should not rely on our past results as indicative of our future performance. In addition, a significant portion of our operating expense is relatively fixed in nature, and planned expenditures are based in part on expectations regarding future revenue.
We also face competition from universities and public and private research institutions in recruiting and retaining highly qualified scientific personnel. We may have difficulties locating, recruiting or retaining qualified salespeople. Recruiting and retention difficulties can limit our ability to support our research and development and sales programs.
We also face competition from universities and public and private research institutions in recruiting and retaining highly qualified scientific personnel. We may have difficulties locating, recruiting or retaining qualified salespeople. Recruiting and retention difficulties can limit our ability to support our R&D and sales programs.
We may incur losses in the future as we plan to invest 27 Table of Contents significant additional funds toward the expansion of our commercial organization, the conduct of clinical utility and validity studies to support adoption of our products and the development or acquisition of additional products.
We may incur losses in the future as we plan to invest significant additional funds toward the expansion of our commercial organization, the conduct of clinical utility and validity studies to support adoption of our products and the development or acquisition of additional products.
The occurrence of any of these events may have a material adverse effect on our business, results of operation, financial condition or cash flows. 55 Table of Contents We depend on information technology systems that we license from third parties.
The occurrence of any of these events may have a material adverse effect on our business, results of operation, financial condition or cash flows. We depend on information technology systems that we license from third parties.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation and amended and restated bylaws provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation provide that unless we consent in writing to the selection of an alternative forum, the federal district courts of the U.S. shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision.
In addition, the FDA regulates the import and export of medical devices manufactured between the United States and international markets. We are subject to CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease.
In addition, the FDA regulates the import and export of medical devices manufactured between the U.S. and international markets. We are subject to CLIA, a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease.
Our in-licensed intellectual property has been discovered through government funded programs and thus may be subject to federal regulations such as ‘‘march-in’’ rights, certain reporting requirements and a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers.
Our in-licensed intellectual property has been discovered through government funded programs and thus may be subject to federal regulations such as “march-in” rights, certain reporting requirements and a preference for U.S.-based companies, and compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers.
Whether 35 Table of Contents healthcare providers adopt DecisionDx-Melanoma as a complementary or triage diagnostic method relative to the SLNB surgery will depend on our ability to increase awareness of DecisionDx-Melanoma and its clinical validation.
Whether healthcare providers adopt DecisionDx-Melanoma as a complementary or triage diagnostic method relative to the SLNB surgery will depend on our ability to increase awareness of DecisionDx-Melanoma and its clinical validation.
Our most recent inspections were in October 2022 for Phoenix and October 2023 for Pittsburgh and were deemed to be compliant with the NYSDOH regulations and standards and both labs remain in good standing as of December 31, 2024.
Our most recent inspections were in October 2025 for Phoenix and October 2023 for Pittsburgh and were deemed to be compliant with the NYSDOH regulations and standards and both labs remain in good standing as of December 31, 2025.
It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. We may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patents licensed from or to third parties.
It is also possible that we will fail to identify patentable aspects of our R&D output before it is too late to obtain patent protection. We may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patents licensed from or to third parties.
The patent positions of life sciences companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has emerged to date in the United States or elsewhere.
The patent positions of life sciences companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in such companies’ patents has emerged to date in the U.S. or elsewhere.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including Security Management. Security Management works with the Company’s incident response team to help the Company mitigate and remediate cybersecurity incidents of 73 Table of Contents which they are notified.
Biggest changeThe DCSI is responsible for hiring appropriate personnel, leading enterprise-wide cybersecurity strategy, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel. 79 Table of Contents Our cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including Security Management.
We use third-party service providers to perform a variety of functions throughout our business, such as application providers and hosting companies. We have vendor management processes to manage cybersecurity risks associated with our use of certain providers.
We use third-party service providers to perform a variety of functions throughout our business, such as application providers and hosting companies. We have vendor management processes designed to manage cybersecurity risks associated with our use of certain providers.
We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example professional services firms (including legal counsel), threat intelligence service providers, cybersecurity consultants, cybersecurity software and managed service providers, penetration testing firms, and dark web monitoring services.
We use third-party service providers to assist us from time to time in an effort to identify, assess and manage material risks from cybersecurity threats, including for example professional services firms (including legal counsel), threat intelligence service providers, cybersecurity consultants, cybersecurity software and managed service providers, penetration testing firms and dark web monitoring services.
Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and data related to our clinical trials and commercial and pipeline tests (“Information Systems and Data”).
Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature and data related to our clinical trials and commercial and pipeline tests (“Information Systems and Data”). 78 Table of Contents Our Director of Cyber Security & Infrastructure (“DCSI”) oversees our information security function, which in conjunction with our security and engineering operations, Security Operations Center, a third-party managed security provider, helps identify, assess and manage the Company’s cybersecurity threats and risks.
In addition, the Company’s incident response plan includes reporting to the audit committee of the board of directors for certain cybersecurity incidents.
Security Management works with the Company’s incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified. In addition, the Company’s incident response plan includes reporting to the audit committee of the board of directors for certain cybersecurity incidents.
Our DCSI has over 20 years of experience as a security professional, has a CISSP certification, and has completed the Carnegie Melon Insider Risk Management Program. The DCSI is responsible for hiring appropriate personnel, leading enterprise-wide cybersecurity strategy, helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities to relevant personnel.
Our DCSI has over 20 years of experience as a security professional, has a CISSP certification, and has completed the Carnegie Melon Insider Risk Management Program.
Removed
Our Director of Cyber Security & Infrastructure (“DCSI”) oversees our information security function, which in conjunction with our security and engineering operations, Security Operations Center, a third-party managed 72 Table of Contents security provider, helps identify, assess and manage the Company’s cybersecurity threats and risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe own 23 acres of land in Friendswood, Texas. We have contracted for the development and construction of an 80,000 square foot commercial office building on this land. Construction is currently underway and is expected to be completed in early 2026 and will be the future location for our corporate headquarters.
Biggest changeItem 2. Properties. We own 23 acres of land in Friendswood, Texas. In January 2026, we completed construction of the portions of an approximately 80,000 square foot commercial office building that serves as our new corporate headquarters. Construction of the remaining portions of the building is ongoing.
We lease approximately 45,000 square feet of commercial real estate located in Pittsburgh, Pennsylvania. This lease commenced in April 2023 under a 10.5-year term, expiring in October 2033, and provides us with a single five-year renewal option which we have not used. A majority of the square footage in this facility is dedicated for laboratory use.
We lease approximately 45,000 square feet of commercial real estate located in Pittsburgh, Pennsylvania. This lease commenced in April 2023 under a term of 10.5 years, expiring in October 2033, and provides us with a single five-year renewal option which we have not used. A majority of the square footage in this facility is dedicated for laboratory use.
We lease approximately 46,000 square feet of commercial real estate located in Phoenix, Arizona under two agreements with terms expiring in July 2033 and October 2033, respectively. Each contract provides us with two five-year renewal options, none of which have been used. Most of the square footage at these locations is dedicated laboratory space.
We lease approximately 46,000 square feet of commercial real estate located in Phoenix, Arizona under two agreements with terms expiring in July 2033 and February 2034, respectively. Each contract provides two five-year renewal options, none of which have been exercised. Most of the square footage at these locations is dedicated laboratory space.
Item 2. Properties. We lease approximately 27,000 square feet of commercial office space located in Friendswood, Texas where our corporate headquarters is currently located. This lease commenced in late 2020 under a 60-month term that will expire in November 2025, and provides for a single five-year renewal option which we have not used.
We intend to lease out approximately 33,000 square feet of office space within the building. We lease approximately 27,000 square feet of commercial office space located in Friendswood, Texas where our corporate headquarters was previously located. This lease commenced in late 2020 under a 60-month term and, under a subsequent amendment, now expires in March 2026.
Removed
We intend to lease out approximately 33,000 square feet of office space in our building.
Added
We lease approximately 55,000 square feet of office and laboratory space in Scottsdale, Arizona under a lease that we entered into in May 2025. The lease covers a term of 143 months that will expire in April 2037. We also have a right of refusal to lease any additional adjacent space that may become available.
Added
The lease grants us two optional five year term extensions and a one-time option early termination right at the end of the 96 month, subject to certain conditions and payment of an early termination fee.
Added
We believe that our existing facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms. 80 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOn February 1, 2024, we received a subpoena from United States 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.
Biggest changeOn February 1, 2024, we received a subpoena from U.S. 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 is in the process of responding to the subpoena.
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 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. Item 4. Mine Safety Disclosures. Not applicable. 74 Table of Contents PART II
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. Item 4. Mine Safety Disclosures. Not applicable. 81 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe offer and sale of all of the shares of our common stock in the IPO were registered under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to our Registration Statements on Form S-1, as amended (File Nos. 333-232369 and 333-232796), which were declared or became effective on July 24, 2019.
Biggest changeUse of Proceeds from the IPO of Common Stock We completed the initial public offering (“IPO”) of our common stock in July 2019 pursuant to our Registration Statements on Form S-1, as amended (File Nos. 333-232369 and 333-232796) (the “IPO Registration Statements”) with the Securities and Exchange Commission (the “SEC”), which were declared or became effective on July 24, 2019.
The graph and table below assume that $100 was invested on December 31, 2019, and dividends, if any, were reinvested on the date of payment without payment of any commissions.
The graph and table below assume that $100 was invested on December 31, 2020, and dividends, if any, were reinvested on the date of payment without payment of any commissions.
Stock Performance Graph The following information is not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing. 75 Table of Contents The graph below compares the cumulative total stockholder return of our common stock to the Nasdaq Composite Index and the Nasdaq Biotechnology Total Return Index.
Stock Performance Graph The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it by reference into such a filing. 82 Table of Contents The graph below compares the cumulative total stockholder return of our common stock to the Nasdaq Composite Index and the Nasdaq Biotechnology Total Return Index.
Holders of Record As of February 20, 2025, there were approximately 90 stockholders of record of our common stock, which does not include stockholders who hold shares in street name. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Holders of Record As of February 19, 2026, there were approximately 73 stockholders of record of our common stock, which does not include stockholders who hold shares in street name. Dividend Policy We have never declared or paid cash dividends on our capital stock.
Since the effective date of our registration statement through December 31, 2024, we have not used any of the net proceeds from the IPO. Pending such uses, we have invested, and plan to continue to invest, the balance of the net proceeds from the IPO in cash and cash equivalent securities or highly liquid investment securities.
Since the effective date of our IPO Registration Statements through December 31, 2025, we have not used any of the net proceeds from the IPO. Pending their use, we plan to invest the balance of the net proceeds from the IPO in cash, cash equivalent, and highly liquid investment securities.
Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on, among other factors, our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. Recent Sales of Unregistered Equity Securities None.
Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on, among other factors, our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. In addition, the 2024 LSA limits our ability to pay cash dividends.
There has been no material change in our planned use of the net proceeds from the IPO as described in the final prospectus filed with the Securities and Exchange Commission (the “SEC”) on July 26, 2019 relating to our Registration Statements on Form S-1 (File Nos. 333-232369 and 333-232796).
There has been no material change in our planned use of the net proceeds from the offering as described in the final prospectus filed with the SEC on July 26, 2019 related to our IPO Registration Statements.
The comparisons in the table are required by the SEC and are not intended to forecast or be indicative of future performance of our common stock. 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Castle Biosciences, Inc. $ 100.00 $ 195.37 $ 124.73 $ 68.49 $ 62.79 $ 77.54 Nasdaq Composite Index $ 100.00 $ 143.64 $ 174.36 $ 116.65 $ 167.30 $ 215.22 Nasdaq Biotechnology Total Return Index $ 100.00 $ 125.46 $ 125.49 $ 112.78 $ 117.96 $ 117.30 Item 6. [Reserved].
The comparisons in the table are required by the SEC and are not intended to forecast or be indicative of future performance of our common stock. 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Castle Biosciences, Inc. $ 100.00 $ 63.84 $ 35.06 $ 32.14 $ 39.69 $ 57.93 Nasdaq Composite Index $ 100.00 $ 121.39 $ 81.21 $ 116.47 $ 149.83 $ 180.33 Nasdaq Biotechnology Total Return Index $ 100.00 $ 100.02 $ 89.90 $ 94.03 $ 93.49 $ 124.75 Item 6. [Reserved].
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the three months ended December 31, 2025.
Removed
Use of Proceeds from the IPO of Common Stock On July 29, 2019, we completed the initial public offering of our common stock (our “IPO”), pursuant to which we issued and sold 4,600,000 shares of our common stock, including 600,000 shares associated with the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $16.00 per share.
Added
Recent Sales of Unregistered Equity Securities During the year ended December 31, 2025, we did not issue or sell any unregistered securities not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Added
Securities Authorized for Issuance under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K for information about our equity compensation plans which is incorporated by reference herein.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

140 edited+40 added−49 removed53 unchanged
Biggest changeAlso, as of December 31, 2024, we also had state NOL carryforwards of $86.5 million, which begin to expire in 2028 if not utilized to offset state taxable income. 83 Table of Contents Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the periods indicated (in thousands, except percentages): Years Ended December 31, Change 2024 2023 NET REVENUES $ 332,069 $ 219,788 $ 112,281 51.1 % OPERATING EXPENSES AND OTHER OPERATING INCOME Cost of sales (exclusive of amortization of acquired intangible assets) 60,205 44,982 15,223 33.8 % Research and development 52,041 53,618 (1,577) (2.9) % Selling, general and administrative 200,047 180,152 19,895 11.0 % Amortization of acquired intangible assets 11,106 9,013 2,093 23.2 % Total operating expenses, net 323,399 287,765 35,634 12.4 % Operating income (loss) 8,670 (67,977) 76,647 112.8 % Interest income 12,916 10,623 2,293 21.6 % Changes in fair value of trading securities 555 — 555 NA Interest expense (577) (11) (566) NM Income (loss) before income taxes 21,564 (57,365) 78,929 137.6 % Income tax expense 3,319 101 3,218 NM Net income (loss) $ 18,245 $ (57,466) $ 75,711 131.7 % (1) NA = Not applicable (2) NM = Not meaningful The following table indicates the amount of stock-based compensation expense (non-cash) reflected in the line items above (in thousands): Years Ended December 31, 2024 2023 Change Cost of sales (exclusive of amortization of acquired intangible assets) $ 5,529 $ 4,938 $ 591 Research and development 9,598 10,119 (521) Selling, general and administrative 35,193 36,162 (969) Total stock-based compensation expense $ 50,320 $ 51,219 $ (899) The following table provides a disaggregation of net revenues by type (in thousands): Years Ended December 31, 2024 2023 Change Dermatologic (1) $ 256,996 $ 183,375 $ 73,621 Non-Dermatologic (2) 75,073 36,413 38,660 Total net revenues $ 332,069 $ 219,788 $ 112,281 (1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma).
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the periods indicated (in thousands, except percentages): Years Ended December 31, Change 2025 2024 NET REVENUES $ 344,229 $ 332,069 $ 12,160 3.7 % OPERATING EXPENSES Cost of sales (exclusive of amortization of acquired intangible assets) 71,028 60,205 10,823 18.0 % Research and development 51,850 52,041 (191) (0.4) % Selling, general and administrative 229,323 200,047 29,276 14.6 % Amortization of acquired intangible assets 34,838 11,106 23,732 213.7 % Total operating expenses, net 387,039 323,399 63,640 19.7 % Operating (loss) income (42,810) 8,670 (51,480) (593.8) % Interest income 11,772 12,916 (1,144) (8.9) % Net gains on equity securities 1,466 555 911 164.1 % Interest expense (86) (577) 491 85.1 % Other income 144 — 144 NA (Loss) income before income taxes (29,514) 21,564 (51,078) (236.9) % Income tax (benefit) expense (5,356) 3,319 (8,675) (261.4) % Net (loss) income $ (24,158) $ 18,245 $ (42,403) (232.4) % NA = Not applicable 91 Table of Contents Net Revenues The following table provides a disaggregation of net revenues by type (in thousands): Years Ended December 31, 2025 2024 Change Dermatologic (1) $ 216,369 $ 256,996 $ (40,627) Non-Dermatologic (2) 127,860 75,073 52,787 Total net revenues $ 344,229 $ 332,069 $ 12,160 (1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and MyPath Melanoma.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.
Our Financial Results Our net income (loss) may fluctuate significantly from period to period, depending on the timing of our planned development activities, the growth of our sales and marketing activities and the timing of revenue recognition under ASC 606.
Our Financial Results Our net (loss) income may fluctuate significantly from period to period, depending on the timing of our planned development activities, the growth of our sales and marketing activities and the timing of revenue recognition under ASC 606.
Investing Activities Net cash used in investing activities was $50.1 million for the year ended December 31, 2024 and consisted primarily of purchases of marketable investment securities of $205.7 million, and purchases of property and equipment of $28.3 million, partially offset by the maturity of marketable investment securities of $183.9 million.
Net cash used in investing activities was $50.1 million for the year ended December 31, 2024 and consisted primarily of purchases of marketable investment securities of $205.7 million and purchases of property and equipment of $28.3 million, partially offset by the maturity of marketable investment securities of $183.9 million.
As a result, our cost of sales as a percentage of revenues may vary significantly from period to period because we do not recognize all revenues in the period in which the associated costs are incurred. We expect cost of sales in absolute dollars to increase as the number of tests we perform increases.
As a result, our cost of sales as a percentage of revenue may vary significantly from period to period because we do not recognize all revenues in the period in which the associated costs are incurred. We expect cost of sales in absolute dollars to increase as the number of tests we perform increases.
We expect our cost of sales expenses (exclusive of amortization of acquired intangible assets) to continue to increase in future periods as we hire additional laboratory personnel and related resources to support expected operational growth and higher test volumes.
We expect our cost of sales expenses (exclusive of amortization of acquired intangible assets) to continue to increase in future periods as we hire additional laboratory personnel and invest in related resources to support our expected operational growth and higher test volumes.
Currently, our revenue is primarily generated by our DecisionDx-Melanoma risk stratification test for cutaneous melanoma (“CM”) and our DecisionDx-SCC risk stratification test for cutaneous squamous cell carcinoma (“SCC”), which is supplemented by revenue generated from our TissueCypher risk stratification test for BE and our DecisionDx-UM risk stratification test for UM.
Our revenue is primarily generated by our DecisionDx-Melanoma risk stratification test for cutaneous melanoma (“CM”), our TissueCypher risk stratification test for BE which is supplemented by revenue generated from our DecisionDx-SCC risk stratification test for cutaneous squamous cell carcinoma (“SCC”), and our DecisionDx-UM risk stratification test for UM.
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.
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 paid prior to March 26, 2026.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” The following generally compares our results of operations for the years ended December 31, 2024 and 2023.
Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading “Special Note Regarding Forward-Looking Statements” and “Risk Factors.” The following generally compares our results of operations for the years ended December 31, 2025 and 2024.
For stock options, we have set the expected term using the simplified method based on the weighted average of both the period to vesting and the period to maturity for each option, as we have concluded that our stock option exercise history does not provide a reasonable basis upon which to estimate the expected term.
For stock options, we have set the expected term using the simplified method based on the weighted-average of both the period to vesting and the period to maturity for each option as we have concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate the expected term.
Variable consideration is recognized only to the extent it is probable that a significant reversal of revenue will not occur in future periods when the uncertainties are resolved. Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues.
Variable consideration is recognized only to the extent it is probable that a significant reversal of revenue will not occur in future periods when the uncertainties are resolved. Variable consideration is evaluated and reassessed each reporting period and adjustments are recorded as increases or decreases in revenue.
We expect our lease obligations may increase in the future as we expand our facilities, operations and headcount in support of the anticipated growth in our portfolio of commercial products and pipeline tests. Refer to Note 11 of the consolidated financial statements for additional information on our leasing arrangements.
We expect our lease obligations may increase in the future as we expand our facilities, operations and headcount in support of the anticipated growth in our portfolio of commercial products and pipeline tests. Refer to Note 10 of the consolidated financial statements for additional information on our leasing arrangements.
In a typical year, we estimate approximately 130,000 patients are diagnosed with invasive CM in the United States, representing an estimated U.S. total addressable market (“TAM”) of approximately $540 million. We estimate that approximately 50% of patients diagnosed with CM are 65 years of age or older.
In a typical year, we estimate approximately 130,000 patients are diagnosed with invasive CM in the U.S., representing an estimated U.S. total addressable market (“TAM”) of approximately $540 million. We estimate that approximately 50% of patients diagnosed with CM are 65 years of age or older.
Our actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Our actual results may differ from these estimates under different assumptions or conditions. 98 Table of Contents While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Previously, because of the limited period of time our stock had been traded in an active market, we calculated expected volatility by using the historical stock prices of a group of similar companies looking back over the estimated life of the option or the purchase rights under the ESPP and averaging the volatilities of these companies.
Previously, because of the limited period of time our stock had been traded in an active market, we calculated expected volatility by using the historical stock prices of a group of similar companies looking back over the estimated life of the option or the ESPP purchase right and averaging the volatilities of these companies.
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.
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.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect 90 Table of Contents the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.
Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our consolidated financial statements.
All five of our MAAA tests have been granted Advanced Diagnostic Laboratory Test (“ADLT”) status by the Centers for Medicare and Medicaid (“CMS”) which means each test has demonstrated that (i) when combined with an empirically derived algorithm, it yields a result that predicts the probability a specific individual patient will develop a certain condition or conditions, or will respond to a particular therapy or therapies; and (ii) it provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests.
All of our MAAA tests, excluding our recently launched AdvanceAD-Tx test, have been granted Advanced Diagnostic Laboratory Test (“ADLT”) status by the Centers for Medicare and Medicaid (“CMS”) which means each test has demonstrated that (i) when combined with an empirically derived algorithm, it yields a result that predicts the probability a specific individual patient will develop a certain condition or conditions, or will respond to a particular therapy or therapies; and (ii) it provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests.
We anticipate that a substantial portion of our cash requirements in the foreseeable future will relate to the further commercialization of our currently marketed products, the development of our future product candidates in our pipeline and the potential commercialization of these pipeline products, should their development be successful and the construction of our future corporate headquarters.
We anticipate that a substantial portion of our cash requirements in the foreseeable future will relate to the further commercialization of our currently marketed products, the development of our future product candidates in our pipeline and the potential commercialization of these pipeline products, should their development be successful.
As of December 31, 2024, we were in compliance with these 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.
As of December 31, 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.
Our Gastroenterology Test TissueCypher is our proprietary risk stratification spatial-omics test designed to predict future development of progression of high-grade dysplasia (“HGD”) and/or esophageal cancer in patients with non-dysplastic (“ND”), indefinite dysplasia (“IND”) or low-grade dysplasia (“LGD”) BE. We estimate a U.S. TAM of approximately $1 billion.
Our Gastroenterology Test TissueCypher is our proprietary risk stratification spatialomics test designed to predict future development of high-grade dysplasia (“HGD”) and/or esophageal cancer in patients with non-dysplastic (“ND”), indefinite dysplasia (“IND”) or low-grade dysplasia (“LGD”) BE. We estimate a U.S. TAM of approximately $1 billion.
We 87 Table of Contents believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from the sale of our commercial products will be sufficient to fund our operations for at least the next 12 months.
We believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from the sale of our commercial products will be sufficient to fund our operations for at least the next 12 months.
A detailed discussion comparing our results of operations for the years ended December 31, 2023 and 2022 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 28, 2024.
A detailed discussion comparing our results of operations for the years ended December 31, 2024 and 2023 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 27, 2025.
We believe that expanding reimbursement is an important indicator of the value of our products. Payors require extensive evidence of clinical utility, clinical validity, patient outcomes and health economic benefits in order to provide reimbursement for diagnostic products. Our revenue depends on our ability to demonstrate the value of our products to these payors. • Gross margin.
Payors require extensive evidence of clinical utility, clinical validity, patient outcomes and health economic benefits in order to provide reimbursement for diagnostic products. Our revenue depends on our ability to demonstrate the value of our products to these payors. • Gross margin. We believe that our gross margin is an important indicator of the operating performance of our business.
The integration of acquired assets may impact our revenue growth, increase the cost of operations or may require management resources that otherwise would be available for ongoing development of our existing business. • New product development. A significant aspect of our business is our investment in research and development activities, including activities related to the development of new products.
The integration of acquired assets may impact our revenue growth, increase the cost of operations or may require management resources that otherwise would be available for ongoing development of our existing business. • New product development. A significant aspect of our business is our investment in R&D activities, including activities related to the development of new products.
Increases in personnel costs reflect headcount expansions in our administrative support functions as well as merit and annual inflationary wage adjustment for existing employees. Stock-based compensation expense included in general and administrative expense was $17.8 million for the year ended December 31, 2024, compared to $17.9 million for the year ended December 31, 2023.
Increases in personnel costs reflect headcount expansions in our administrative support functions as well as merit and annual inflationary wage adjustment for existing employees. Stock-based compensation expense included in general and administrative expense was $17.4 million for the year ended December 31, 2025, compared to $17.8 million for the year ended December 31, 2024.
For our DecisionDx-SCC product line, we continue to see opportunities for leverage, where many of the clinicians ordering our DecisionDx-Melanoma are the same clinicians who order our DecisionDx-SCC test. For both years ended December 31, 2024 and 2023, approximately 78% of all clinicians ordering DecisionDx-SCC had also ordered our DecisionDx-Melanoma test during that same period.
For our DecisionDx-SCC product line, we continue to see opportunities for leverage, where many of the clinicians ordering our DecisionDx-Melanoma are the same clinicians who order our DecisionDx-SCC test. For both years ended December 31, 2025 and 2024, approximately 77% of all clinicians ordering DecisionDx-SCC had also ordered our DecisionDx-Melanoma test during that same period.
The Medicare rates discussed below are prior to giving effect to applicable sequestration in effect from time to time as described in further detail under "Government Regulation and Product Approval—Healthcare Reform" included in Item 1, Business, of this Annual Report on Form 10-K.
The Medicare rates discussed below are prior to giving effect to applicable sequestration in effect from time to time as described in further detail under “Government Regulation and Product Approval—Healthcare Reform” included in Item 1, Business, of this Annual Report on Form 10-K.
Financing Activities Net cash provided by financing activities was $6.1 million for the year ended December 31, 2024, and consisted primarily of $10.0 million of proceeds from issuance of long-term debt and $3.0 million of proceeds from contributions to our 2019 Employee Stock Purchase Plan (the “ESPP”) and $2.0 million of proceeds from the exercise of stock options, partially offset by the $8.8 million payment of employee taxes attributable to the vesting of RSUs.
Net cash provided by financing activities was $6.1 million for the year ended December 31, 2024, and consisted primarily of $10.0 million of proceeds from issuance of long-term debt and $3.0 million of proceeds from contributions to our ESPP and $2.0 million of proceeds from the exercise of stock options, partially offset by the $8.8 million payment of employee taxes attributable to the vesting of RSUs.
Our Ophthalmology Test DecisionDx-UM is a proprietary, risk stratification GEP test that predicts the risk of metastasis for patients with UM. We believe DecisionDx-UM is the standard of care in the management of newly diagnosed UM in the majority of ocular oncology practices in the United States. We estimate a U.S. TAM of approximately $10 million.
Our Ophthalmology Test DecisionDx-UM is our proprietary, risk stratification GEP test that predicts the risk of metastasis for patients with UM. We believe DecisionDx-UM is the standard of care in the management of newly diagnosed UM in the majority of ocular oncology practices in the United States. We estimate a U.S.
The higher test report volumes are a result of our continued investments in human capital for our sales organization. Stock based compensation expense included in sales and marketing expense was $17.3 million for the year ended December 31, 2024, compared to $18.3 million for the year ended December 31, 2023.
Higher test report volumes are a result of our continued investments in human capital for our sales organization. Stock-based compensation expense included in sales and marketing expense was $15.3 million for the year ended December 31, 2025, compared to $17.3 million for the year ended December 31, 2024.
As mentioned above, we expect to use a portion of our cash and cash equivalents and marketable investment securities to further support and accelerate our research and development activities, including the clinical studies noted above in “—Components of the Results of Operations—Research and Development.” Material Cash Requirements Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical research and development services, laboratory operations, equipment and related supplies, legal and other regulatory expenses, general administrative costs and, from time to time, expansion of our laboratory and office facilities in support of our growth, such as the construction of our future corporate headquarters.
As mentioned above, we expect to use a portion of our cash and cash equivalents and marketable investment securities to further support and accelerate our R&D activities, including the clinical studies noted above in “—Components of the Results of Operations—Research and Development.” Material Cash Requirements Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical R&D services, laboratory operations, equipment and related supplies, legal and other regulatory expenses, general administrative costs and, from time to time, expansion of our laboratory and office facilities in support of our growth.
Subsequent to our IPO, the fair value of our common stock is the closing selling price per share of our common stock as reported on the Nasdaq Global Market on the date of grant or other relevant determination date.
The fair value of our common stock is the closing selling price per share of our common stock as reported on the Nasdaq Global Market on the date of grant or other relevant determination date.
Should an event of default occur, including the occurrence of a 88 Table of Contents 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.
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.
Further information about Medicare coverage and ADLT status with respect to each of our tests is set forth below. Test Overview Our Dermatology Tests DecisionDx-Melanoma is our proprietary risk stratification gene expression profile (“GEP”) test that predicts the risk of metastasis or recurrence, including a positive sentinel lymph node, for patients diagnosed with invasive CM.
Further information about Medicare coverage and ADLT status with respect to each of our tests is set forth below. Test Overview Our Dermatology Tests DecisionDx-Melanoma is our proprietary risk stratification gene expression profile (“GEP”) test designed to predict the likelihood of a positive sentinel lymph node and the risk of metastasis or recurrence, for patients diagnosed with invasive CM.
Cost of Sales (exclusive of amortization of acquired intangible assets) The components of our cost of sales are material and service costs associated with testing samples, personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), electronic medical record set up costs, order and delivery systems, shipping charges to transport samples, third-party test fees, and allocated overhead including rent, information technology costs, equipment and facilities depreciation and utilities.
Cost of Sales (exclusive of amortization of acquired intangible assets) The components of our cost of sales are material and service costs associated with processing testing samples, personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), electronic medical record setup costs, order and delivery systems, shipping charges for sample transport, third-party test fees, and allocated overhead including rent, information technology costs, equipment and facilities depreciation and utilities.
Costs 82 Table of Contents associated with testing samples are recorded when the test is processed regardless of whether and when revenues are recognized with respect to that test.
Costs associated with testing samples are recorded when the test is processed regardless of whether and when revenues are recognized with respect to that test.
See the table in “—Results of Operations—Comparison of the years ended December 31, 2024 and 2023” for details. Research and Development Research and development expenses include costs incurred to develop our tests, collect clinical samples and conduct clinical studies to develop and support our products.
See the table in “—Results of Operations—Comparison of the Years Ended December 31, 2025 and 2024” for details. Research and Development R&D expenses include costs incurred to develop our tests, collect clinical samples and conduct clinical studies to develop and support our products.
Other Events Impact of Macroeconomic Conditions Macroeconomic conditions, including uncertainties associated with the Israel-Hamas war, the ongoing conflict between Ukraine and Russia, economic slowdowns, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, liquidity concerns at, and failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets or other evolving macroeconomic developments, continue to have direct and indirect impacts on our business and could in the future materially impact our results of operations and financial condition.
Other Events Impact of Macroeconomic Conditions Macroeconomic conditions, including uncertainties associated with the ongoing conflicts in the Middle East, the ongoing conflict between Ukraine and Russia, economic slowdowns, the recent shutdown of the federal government including regulatory agencies, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, international tariffs, liquidity concerns at, and failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets and other evolving macroeconomic developments, continue to have direct and indirect impacts on our business and could in the future materially impact our results of operations and financial condition.
The period in which a test report is delivered does not necessarily correspond with the period in which the related revenue, if any, is recognized, due to the timing and amount of adjustments for variable consideration under Accounting Standards Codification (‘‘ASC’’) Topic 606, Revenue from Contracts with Customers (“ASC 606”).
The period in which a test report is delivered does not necessarily correspond with the period in which the related revenue, if any, is recognized, due to the timing and amount of adjustments for variable consideration under ASC Topic 606, Revenue from Contracts with Customers .
In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting date. For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date.
In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting 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.
Net revenue from our non-dermatologic tests as a percentage of total net revenue increased from 16.6% for the year ended December 31, 2023 to 22.6% for the year ended December 31, 2024.
Net revenue from our non-dermatologic tests as a percentage of total net revenue increased from 22.6% for the year ended December 31, 2024 to 37.1% for the year ended December 31, 2025.
We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures. W e 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 our consolidated financial statements or disclosures upon adoption.
W e 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 our consolidated financial statements or disclosures upon adoption.
Other administrative and professional services expenses within SG&A are expected to increase with the scale of our business, but selling and marketing-related expenses are expected to increase significantly, consistent with our growth strategy.
Other administrative and professional services expenses within SG&A are expected to increase as the scale of our business grows, but selling and marketing-related expenses are expected to increase at a higher rate, consistent with our growth strategy.
The following table sets forth the assumptions used to determine the fair value of stock options: Years Ended December 31, 2024 2023 2022 Average expected term (years) 5.0 5.0 5.8 Expected stock price volatility 80.20% - 80.20% 75.57% - 76.01% 68.3% - 75.0% Risk-free interest rate 4.39% - 4.39% 3.57% - 3.57% 1.5% - 4.2% Dividend yield —% —% —% The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Years Ended December 31, 2024 2023 2022 Average expected term (years) 1.2 1.3 1.3 Expected stock price volatility 59.85% - 105.39% 72.80% - 130.95% 63.0% - 91.8% Risk-free interest rate 3.82% - 5.14% 4.74% - 5.33% 0.6% - 3.5% Dividend yield —% —% —% Intangible Assets and Goodwill Intangible assets Our intangible assets, which are comprised primarily of acquired developed technology, are considered to be finite-lived and are amortized on a straight-line basis over their estimated useful lives.
The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Years Ended December 31, 2025 2024 2023 Average expected term (years) 1.2 1.2 1.3 Expected stock price volatility 56.55% - 85.21% 59.85% - 105.39% 72.80% - 130.95% Risk-free interest rate 3.52% - 4.22% 3.82% - 5.14% 4.74% - 5.33% Dividend yield —% —% —% Intangible Assets and Goodwill Intangible assets Our intangible assets, which are comprised primarily of acquired developed technology, are considered to be finite-lived and are amortized on a straight-line basis over their estimated useful lives.
The rate for our MyPath Melanoma test is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2024 was set using median private payor rate data from January 1, 2022 to June 30, 2022.
Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2025 was set using median private payor rate data from January 1, 2023 to June 30, 2023.
We expect material increases in stock-based compensation expense in future periods, attributable to both existing awards outstanding and anticipated additional grants to our current and future employees. We had 761 employees as of December 31, 2024, compared to 610 as of December 31, 2023.
We expect stock-based compensation expense will continue to be material in future periods, attributable to both existing awards outstanding and anticipated additional grants to our current and future employees. As of December 31, 2025, we had 883 employees compared to 761 as of December 31, 2024.
For the year ended December 31, 2024, we recognized net income of $18.2 million and had positive operating cash flow of $64.9 million, though we may be unable to sustain profitability and positive cash flows in future periods. Collections on Medicare claims for our DecisionDx-SCC test represented a significant portion of our 2024 operating cash flows.
For the year ended December 31, 2025, we recognized net loss of $24.2 million and had positive operating cash flow of $64.3 million; however, we may be unable to sustain positive cash flows in future periods. Collections on Medicare claims for our DecisionDx-SCC test represented a significant portion of our operating cash flows during 2024.
Total undiscounted future minimum payment obligations under our operating leases and finance leases as of December 31, 2024 totaled approximately $23.3 million, of which $3.1 million is payable in 2025 and $20.2 million is payable through early 2034. The leases expire on various dates through 2034 and provide certain options to renew for additional periods.
Total undiscounted future minimum payment obligations under our operating leases and finance leases as of December 31, 2025 totaled approximately $39.9 million, of which $2.6 million is payable in 2026 and $37.3 million is payable through early 2037. The leases expire on various dates through 2037 and provide certain options to renew for additional periods.
Since 2022, the rate for DecisionDx-Melanoma is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2023 was set using median private payor rate data from January 1, 2021 to June 30, 2021. Our rate for 2022, 2023 and 2024 was $7,193 per test.
Since 2022, the rate for DecisionDx-Melanoma is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2025 was set using median private payor rate data from January 1, 2023 to June 30, 2023.
If we are unable to raise additional funds through debt or equity financing or other arrangements when needed, we may be required to delay, limit, reduce or terminate our product discovery and development activities or future commercialization efforts. Long-Term Debt We had no debt as of December 31, 2023.
If we are unable to raise additional funds through debt or equity financing or other arrangements when needed, we may be required to delay, limit, reduce or terminate our product discovery and development activities or future commercialization efforts.
Medicare claims that were either submitted to Medicare prior to a medical review and coverage, or an LCD’s effective 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 may be paid upon initial claim submission or if denied for payment 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 ALJ).
Medicare claims that were either submitted to Medicare prior to the LCD 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 ALJ).
Amortization of Acquired Intangible Assets Amortization of acquired intangible assets is primarily associated with developed technology obtained through acquisitions, such as our acquisitions of Cernostics in December 2021 and AltheaDx in April 2022.
Amortization of Acquired Intangible Assets Amortization of acquired intangible assets is primarily associated with developed technology obtained through acquisitions, such as our acquisitions of the Myriad MyPath Laboratory in May 2021, Cernostics in December 2021, AltheaDx in April 2022 and Previse in May 2025.
Our long-term debt as of December 31, 2024 is presented in the table below (in thousands): As of December 31, 2024 Term debt $ 10,200 Unamortized discount (177) Less: Current portion of long-term debt (278) Total long-term debt $ 9,745 2024 Loan and Security Agreement On March 26, 2024 (the ‘‘Closing Date’’), we entered into the 2024 LSA, by and between the Company, its wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Lender’’).
Long-Term Debt Our long-term debt is presented in the table below (in thousands): As of December 31, 2025 2024 Term debt $ 10,200 $ 10,200 Unamortized discount (143) (177) Total debt, net 10,057 10,023 Less: Current portion of long-term debt (417) (278) Total long-term debt $ 9,640 $ 9,745 2024 Loan and Security Agreement On March 26, 2024 (the “Closing Date”), we entered into the 2024 LSA, as amended in April 2025, 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”).
We believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our operations for at least the next 12 months.
As discussed under the caption “Material Cash Requirements,” below, we believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our planned operations for at least the next 12 months.
In the absence of Medicare coverage or contractually established reimbursement rates, 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.
A successful appeal at any of these levels may result in prompt payment. 99 Table of Contents In the absence of Medicare coverage, contractually established reimbursement 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.
Palmetto’s MolDX program oversees MAAA tests that are reported from our Phoenix laboratory and Noridian is the MAC responsible for administering claims for test reports issued by our Phoenix laboratory.
DecisionDx‑SCC We issue our DecisionDx-SCC tests from our Pittsburgh and Phoenix laboratories. Palmetto’s MolDX (“MolDX”) program oversees MAAA tests that are reported from our Phoenix laboratory and Noridian is the MAC responsible for administering Medicare claims for test reports issued by our Phoenix laboratory.
As of December 31, 2024, no draws had been made on the 2024 Credit Line. Leases We have entered into various operating and finance leases, which are primarily associated with our laboratory facilities and office space.
On September 30, 2025, the 2024 Credit Line expired and no draws had been made on it. Leases We have entered into various operating and finance leases, which are primarily associated with our laboratory facilities and office space.
Since our inception, we have generally incurred significant losses and negative operating cash flows, and we have relied heavily on proceeds from our financing activities to fund capital expenditures, business expansion campaigns, and to offset operating deficits.
We intend to use our existing cash and cash equivalents to pay for remainder of this project. Since our inception, we have generally incurred significant losses and negative operating cash flows, and we have relied heavily on proceeds from our financing activities to fund capital expenditures, business expansion campaigns and to offset operating deficits.
Overview Castle Biosciences is a molecular diagnostics company offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus (“BE”), uveal melanoma (“UM”), and in the treatment of mental health conditions. 76 Table of Contents Our Test Portfolio We currently offer five commercially available proprietary multi-analyte assays with algorithmic analysis (“MAAA”) tests for use in the fields of dermatology, gastroenterology and ophthalmology.
Overview Castle Biosciences is a molecular diagnostics company offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus (“BE”), atopic dermatitis (“AD”), and uveal melanoma (“UM”). 83 Table of Contents Our Test Portfolio We currently offer six commercially available proprietary multi-analyte assays with algorithmic analysis (“MAAA”) tests for use in the fields of dermatology, gastroenterology and ophthalmology, and most recently includes a test to guide systemic treatment decisions in moderate-to-severe atopic dermatitis.
These costs consist of personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), prototype materials, laboratory supplies, consulting costs, regulatory costs, electronic medical records set up costs, costs associated with setting up and conducting clinical studies and allocated overhead, including rent, information technology, equipment depreciation and utilities.
These costs consist of personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), prototype materials, laboratory supplies, consulting costs, regulatory costs, electronic medical records setup costs, costs associated with setting up and conducting clinical studies and allocated overhead, including rent, information technology, equipment depreciation and utilities. We expense all R&D costs in the periods in which they are incurred.
We bill third-party payors and patients for the tests we perform. We have received Medicare coverage for our DecisionDx-Melanoma, DecisionDx-SCC, TissueCypher, MyPath Melanoma, DecisionDx-UM and IDgenetix tests which meet certain criteria for Medicare and Medicare Advantage beneficiaries.
We bill third-party payors and patients for the tests we perform. We have received Medicare coverage for our DecisionDx-Melanoma, TissueCypher, MyPath Melanoma, DecisionDx-UM and IDgenetix tests which meet certain criteria for Medicare and Medicare Advantage beneficiaries. DecisionDx-SCC previously received Medicare coverage, which was subsequently impacted by LCD changes finalized in 2025.
As of December 31, 2024, we had federal NOL carryforwards of $129.4 million, of which $52.9 million will begin to expire in 2031 if not utilized to offset federal taxable income, and $76.5 million may be carried forward indefinitely.
As of December 31, 2025, we had federal NOL carryforwards of $134.8 million, of which $52.9 million will begin to expire in 2032 if not utilized to offset federal taxable income, and $81.9 million may be carried forward indefinitely.
General and administrative expenses increased by $10.1 million, or 15.2%, for the year ended December 31, 2024, compared to the year ended December 31, 2023. The increase is primarily due to higher personnel costs, professional fees and information technology-related cost expenses.
General and administrative expenses increased by $14.6 million, or 19.1%, for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase is primarily due to higher personnel costs and higher information technology-related costs.
We expect our expenses will increase substantially over time as we: • execute clinical studies to generate evidence supporting our current and future product candidates; • execute our commercialization strategy for our current and future commercial products; • continue our ongoing and planned development of new products in our pipeline; • seek to discover and develop additional product candidates; • hire additional scientific and research and development staff; • add additional operational, financial and management information systems and personnel; and • make additional capital expenditures to support business growth and sustain existing operations.
We expect our expenses will increase substantially over time as we: • execute clinical studies to generate evidence supporting our current and future product candidates; • execute our commercialization strategy for our current and future commercial products; • continue our ongoing and planned development of new products in our pipeline; • seek to discover and develop additional product candidates; • hire additional scientific and R&D staff; • add additional operational, financial and management information systems and personnel; and • make additional capital expenditures to support business growth and sustain existing operations. 88 Table of Contents Factors Affecting Our Performance We believe there are several important factors that have impacted, and that we expect will continue to impact, our operating performance and results of operations, including: • Report volume.
In part, the cash used during the year ended December 31, 2024 reflects the payment of annual cash bonuses to our employees as well as certain health care benefit payments totaling $20.8 million. In comparison, we paid $17.7 million during the same period in 2023 towards annual cash bonuses and certain health care benefits.
In part, the cash used during the year ended December 31, 2025 reflects the payment of annual cash bonuses to our employees as well as certain health care benefit payments totaling $22.5 million compared to $20.8 million during the same period in 2024.
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 91 Table of Contents predictable pattern and history of collectability with a payor.
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.
On July 4, 2024, Palmetto and Noridian finalized an LCD recommending no coverage for DecisionDx-SCC with an effective date of August 18, 2024. On January 9, 2025, Novitas finalized an oncology biomarker LCD that will become effective on April 24, 2025.
On July 4, 2024, Palmetto and Noridian finalized an LCD recommending no coverage for DecisionDx-SCC with an effective date of August 18, 2024. On January 9, 2025, Novitas finalized an oncology biomarker LCD, Genetic Testing for Oncology: Specific Tests, which also lists DecisionDx-SCC as non-covered; that LCD became effective on April 24, 2025.
Cash Flows The following table summarizes our sources and uses of cash and cash equivalents for each of the periods presented (in thousands): Years Ended December 31, 2024 2023 Net cash provided by (used in) operating activities $ 64,866 $ (5,626) Net cash used in investing activities (50,137) (16,183) Net cash provided by (used in) financing activities 6,139 (2,298) Net change in cash and cash equivalents 20,868 (24,107) Cash and cash equivalents, beginning of year 98,841 122,948 Cash and cash equivalents, end of year $ 119,709 $ 98,841 Operating Activities Net cash provided by operating activities was $64.9 million for the year ended December 31, 2024, and was primarily attributable to the net income of $18.2 million, non-cash stock-based compensation expense of $50.3 million, depreciation and amortization of $16.0 million, increases in accrued compensation of $3.6 million, increases in deferred income taxes of $1.4 million, partially offset by increases in accounts receivable of $12.6 million, increases in accretion of discounts on marketable investment securities of $6.7 million, increases in accounts payable of $4.4 million and increases in prepaid expenses and other current assets of $1.1 million. 89 Table of Contents Net cash used in operating activities was $5.6 million for the year ended December 31, 2023, and was primarily attributable to the net loss of $57.5 million, increases in accounts receivable of $14.9 million, increases in accretion of discounts on marketable investment securities of $5.5 million and increases in inventory of $4.0 million, partially offset by non-cash stock-based compensation expense of $51.2 million, depreciation and amortization of $12.3 million, increases in accounts payable of $5.7 million, increases in accrued compensation of $4.6 million and increases in other accrued and current liabilities of $2.1 million.
Cash Flows The following table summarizes our sources and uses of cash and cash equivalents for each of the periods presented (in thousands): Years Ended December 31, 2025 2024 Net cash provided by operating activities $ 64,347 $ 64,866 Net cash used in investing activities (60,367) (50,137) Net cash (used in) provided by financing activities (6,960) 6,139 Net change in cash and cash equivalents (2,980) 20,868 Cash and cash equivalents, beginning of year 119,709 98,841 Cash and cash equivalents, end of year $ 116,729 $ 119,709 Operating Activities Net cash provided by operating activities was $64.3 million for the year ended December 31, 2025, and was primarily attributable to non-cash stock-based compensation expense of $45.9 million, depreciation and amortization of $40.8 million, decreases in accounts receivable of $6.9 million, increases in accrued compensation of $5.7 million and increases in accounts payable of $3.1 million partially offset by the net loss of $24.2 million, decreases in deferred income taxes of $6.2 million, increases in accretion of discounts on marketable investment securities of $4.2 million, net gains on equity securities of $1.5 million, and increases in inventory of $2.1 million.
Effective April 1, 2024 and through December 31, 2025, the published Clinical Laboratory Fee Schedule (“CLFS”) rate for DecisionDx-SCC will be based on the median private payor rates received between July 1, 2023 and November 30, 2023. We submitted the median private payor data to CMS during the data reporting period in December 2023.
Effective April 1, 2024, and through December 31, 2025, the published Clinical Laboratory Fee Schedule (“CLFS”) rate for DecisionDx-SCC will continue at $8,500 based on the median private payor rates received between July 1, 2023 and November 30, 2023.
The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Under specific circumstances, certain employees may be eligible for accelerated vesting of a portion of their awards upon retirement, contingent upon meeting predefined criteria related to age, tenure, and notice.
The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Under specific circumstances, certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements.
Our ability to increase our revenues will depend on our ability to further penetrate our target markets, and, in particular, generate sales through our direct sales force, maintain Medicare coverage for our currently marketed products , develop and commercialize additional tests, including through acquisitions, obtain reimbursement from additional third-party payors and increase our reimbursement rate for tests performed.
For tests with limited reimbursement experience or no coverage, we recognize revenues based on actual cash collections. 89 Table of Contents Our ability to increase our revenues will depend on our ability to further penetrate our target markets, and, in particular, generate sales through our direct sales force, maintain Medicare coverage for our currently marketed products , develop and commercialize additional tests, including through acquisitions, obtain reimbursement from additional third-party payors and increase our reimbursement rates for tests performed.
There are numerous risks and uncertainties associated with developing genomic tests, including, among others, the uncertainty of: • successful commencement and completion of clinical study protocols; • successful identification and acquisition of tissue samples; • the development and validation of genomic classifiers; and • acceptance of new genomic tests by clinicians, patients and third-party payors including competitor actions.
There are numerous risks and uncertainties associated with developing genomic tests, including, among others, the uncertainty of: • successful commencement and completion of clinical study protocols; • successful identification and acquisition of tissue samples; • the development and validation of genomic classifiers; and • acceptance of new genomic tests by clinicians, patients and third-party payors including competitor actions. 95 Table of Contents Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate our exact working capital requirements.
The increase is primarily due to higher personnel costs, higher sales related travel expense, and higher incurred organizational and business development activities. Increases in personnel costs reflect a higher headcount as well as merit and annual inflationary wage adjustment for existing employees.
The increase is primarily due to higher personnel costs, higher expenses associated training events and speaker conferences and higher sales related travel expenses. Increases in personnel costs reflect a higher headcount as well as merit and annual inflationary wage adjustment for existing employees.
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.
Please refer to Note 15 - Income Taxes, to our Consolidated Financial Statements for details. 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.
Variable consideration for Medicare claims for which there are no existing positive coverage decisions, including those claims subject to approval by an ALJ at an appeal hearing, is deemed to be fully constrained due to factors outside our influence (i.e., 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 because the uncertainty of the amount to be received is not expected to be resolved for a long period of time.
However, absent a contractually committed reimbursement rate with a commercial carrier or governmental program, our diagnostic tests may or may not be covered by these entities’ existing reimbursement policies.
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.
We believe that our gross margin is an important indicator of the operating performance of our business. Higher gross margins reflect the average selling price of our tests, as well as the operating efficiency of our laboratory operations. • Expansion of our sales force and marketing programs.
Higher gross margins reflect the average selling price (“ASP”) of our tests, as well as the operating efficiency of our laboratory operations. • Expansion of our sales force and marketing programs.
Cost of Sales (exclusive of amortization of acquired intangible assets) Cost of sales (exclusive of amortization of acquired intangible assets) for the year ended December 31, 2024 increased by $15.2 million, or 33.8%, compared to the year ended December 31, 2023, primarily due to higher personnel costs and higher expense for supplies and depreciation.
Cost of Sales (exclusive of amortization of acquired intangible assets) Cost of sales (exclusive of amortization of acquired intangible assets) for the year ended December 31, 2025 increased by $10.8 million, or 18.0%, compared to the year ended December 31, 2024, primarily attributable to higher personnel costs, and higher expenses related to services, supplies and depreciation.
Effective August 6, 2023, Palmetto and Noridian issued LCDs that converted the test-specific MyPath Melanoma LCD to a “foundational” LCD and provided coverage for both MyPath Melanoma and DiffDx-Melanoma. MyPath Melanoma was approved as a “new ADLT” in September 2019.
MyPath Melanoma MyPath Melanoma was covered under a test-specific LCD policy through Noridian that became effective in June 2019. Effective August 6, 2023, Palmetto and Noridian issued LCDs that converted the test-specific MyPath Melanoma LCD to a “foundational” LCD and provided coverage for MyPath Melanoma.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long the elevated inflation levels persist and if the rate of inflation were to further increase, neither of which we are able to predict.
Biggest changeInflation Risk Our exposure to inflationary pressures is primarily in personnel and related costs. The extent of any future impacts from inflation on our business and our results of operations will be dependent upon how long the elevated inflation levels persist and if the rate of inflation were to further increase, neither of which we are able to predict.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates fluctuations. We had cash and cash equivalents of $119.7 million as of December 31, 2024, which include bank deposits and money market funds.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest Rate Risk We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rates fluctuations. We had cash and cash equivalents of $116.7 million as of December 31, 2025, which include bank deposits and money market funds.
As of December 31, 2024, we had a term debt of $10.0 million consisting of an outstanding term loan which bears interest at a floating rate that fluctuates with the WSJ Prime Rate, subject to an interest rate floor of 6.00%. During 2024, the U.S.
As of December 31, 2025, we had a term debt of $10.1 million consisting of our outstanding 2024 Term Loan which bears interest at a floating rate that fluctuates with the WSJ Prime Rate, subject to an interest rate floor of 6.00%. During 2025, the U.S.
A hypothetical 10% decrease in the market price of our trading securities as of December 31, 2024 would decrease the fair value by approximately $0.4 million. These securities are subject to a wide variety and number of market-related risks that could substantially reduce or increase the fair value of our holdings.
A hypothetical 10% decrease in the market price of our equity securities as of December 31, 2025 would decrease the fair value by approximately $0.6 million. These securities are subject to a wide variety and number of market-related risks that could substantially reduce or increase the fair value of our holdings.
Further, given the complexities of the reimbursement landscape in which we operate, our payors may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. Equity Price Risk As of December 31, 2024, we had equity securities with a total fair value of $3.6 million.
Further, given the complexities of the reimbursement landscape in which we operate, our payors may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. 102 Table of Contents Equity Price Risk As of December 31, 2025, we had equity securities with a total fair value of $5.6 million.
Federal Reserve lowered interest rates on three separate occasions: by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024. The WSJ Prime Rate decreased by the same basis points for each respective adjustment thereafter.
Federal Reserve lowered interest rates on three separate occasions: by 25 basis points in September 2025, by 25 basis points in October 2025 and by 25 basis points in December 2025. The WSJ Prime Rate decreased by the same basis points for each respective adjustment thereafter.
We had marketable investment securities of $173.4 million as of December 31, 2024, which are U.S. government securities and trading securities. Due to the nature of these instruments, we believe that we have no material exposure to interest rate risk.
We had marketable investment securities of $182.8 million as of December 31, 2025, which includes U.S. government securities. Due to the nature of these instruments, we believe that we have no material exposure to interest rate risk.
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A hypothetical 10% change in interest rates during any of the periods presented would not have a material impact on future interest income or expense, fair values of portfolio of investments, fair value of long-term debt and related cash flows. 94 Table of Contents Inflation Risk Our exposure to inflationary pressures is primarily in personnel and related costs.
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In addition, we hold a loan receivable denominated in Swedish Krona, with a principal amount of SEK 20 million, which bears interest at a rate of 2.00% plus the three-month Stockholm Interbank Offered Rate (“STIBOR”). A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our financial statements.
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We are also exposed to market risk related to changes in foreign currency exchange rates. We do not currently hedge our foreign currency exchange rate risk.

Other CSTL 10-K year-over-year comparisons