Castle Biosciences Q1 2025: Key Contradictions in Melanoma Strategy, Reimbursement, and Acquisitions

Strategy and focus on DecisionDx-Melanoma, reimbursement strategy and DecisionDx-SCC, Previse acquisition strategy and comparison, and IDgenetix discontinuation impact are the key contradictions discussed in Castle Biosciences' latest 2025Q1 earnings call.



Revenue Growth and Business Performance:
- Castle Biosciences reported revenue growth of 21% to $88 million for the first quarter of 2025, with total test report volume for core revenue drivers increasing by 33% compared to the same period in 2024.
- The growth was driven by strong business fundamentals, strategic opportunities, and the acquisition of Previse, a gastrointestinal health company.

Gastroenterology Franchise Expansion:
- TissueCypher test reports delivered in the first quarter of 2025 increased by 117% year-over-year, reaching 7,432 reports compared to 3,429 in the same period in 2024.
- This growth is attributed to the expansion of the sales team, unmet clinical needs in the gastroenterology sector, and increased awareness and education about the test's clinical utility.

Acquisition and Strategic Growth:
- Castle Biosciences signed a definitive agreement to acquire Previse, a gastrointestinal health company.
- The acquisition is part of Castle's strategic growth initiatives to expand its offerings in the gastrointestinal space and enhance its position in addressing unmet clinical needs.

Impact of SCC Reimbursement Changes:
- The Novitas Local Coverage Determination policy, which included noncoverage language for DecisionDx-SCC, went into effect on April 24, 2025.
- The company is pursuing reconsideration requests for both the Novitas and MolDX LCDs, which may impact revenue projections.
- Castle is continuing to offer the test due to its clinical value and the potential of reconsideration requests based on new evidence.