Castle Biosciences Q2 2025: Contradictions Unveiled in Reimbursement Strategies and FDA Approval Timelines

Reimbursement and financial impact of DecisionDx-SCC, volume and ASP growth of DecisionDx-Melanoma, reimbursement strategy for DecisionDx-SCC, impact of SEC reimbursement roll-off on gross margins, and DecisionDx-Melanoma FDA approval timeline are the key contradictions discussed in Castle Biosciences' latest 2025Q2 earnings call.



Strong Financial Performance and Volume Growth:
- Castle Biosciences reported revenue of $86.2 million for Q2 2025, with total test report volume reaching 26,574.
- DecisionDx-Melanoma tests increased to 9,981, reflecting a 16% sequential and 4% year-over-year growth, and TissueCypher tests surged by 92% year-over-year.
- The growth was attributed to the clinical value of their tests, strong execution, and expanded clinical evidence supporting precision medicine.

Impact of Reimbursement Changes:
- DecisionDx-SCC revenue was approximately $15 million in the second quarter of 2025, affected by Novitas and MolDx LCD changes.
- Castle submitted reconsideration requests for these policies, with Novitas accepting the request as valid under CMS guidelines.
- Despite the impact on DecisionDx-SCC revenue, the company continues to offer the test due to its clinical value.

Investments in Growth Initiatives:
- The company maintained a strong balance sheet with $275.9 million in cash, cash equivalents, and marketable securities.
- Investments include collaborations with SciBase for atopic dermatitis and Previse for expanding GI offerings.
- These initiatives aim to capitalize on strategic opportunities for long-term growth and stockholder value.

Expansion in Gastroenterology Segment:
- TissueCypher test volumes increased by 92% year-over-year, contributing significantly to the quarter's overall growth.
- Growth drivers include recognition of unmet clinical needs and commercial optimization efforts.
- The acquisition of Previse is expected to enhance current GI offerings through multi-omics approaches and non-endoscopic sample collection devices.