Castle Biosciences ((CSTL)) has held its Q4 earnings call. Read on for the main highlights of the call.
Castle Biosciences Reports Strong Growth Amidst Challenges in 2024 Earnings Call
Castle Biosciences recently held its 2024 earnings call, revealing a robust financial performance with significant revenue growth and profitability. The company reported substantial increases in test report volumes and cash reserves, underscoring its strong financial health and growth potential. However, the anticipated loss of Medicare coverage for DecisionDx-SCC and expected declines in the mental health segment present challenges moving forward.
Strong Revenue Growth
Castle Biosciences reported a remarkable revenue growth in 2024, with fourth-quarter revenue reaching $86.3 million, marking a 31% increase over the same period in 2023. For the full year, the company achieved a revenue of $332.1 million, representing a 51% increase compared to 2023.
Increased Test Report Volume
The company experienced a significant rise in test report volumes, with a 36% increase in 2024 compared to the previous year. This growth highlights the expanding demand for Castle Biosciences’ diagnostic services.
Cash and Investments Growth
As of December 31, 2024, Castle Biosciences’ cash, cash equivalents, and marketable investment securities totaled $293.1 million, a $50 million increase from the previous year, reflecting a solid financial position.
TissueCypher Test Growth
The TissueCypher test reports saw a staggering 130% growth in 2024 compared to 2023, with 20,956 reports delivered, showcasing the test’s increasing adoption and market penetration.
Profitability Achieved
Castle Biosciences achieved profitability in 2024, reporting a net income of $18.2 million, a significant turnaround from a net loss of $57.5 million in 2023.
Positive Adjusted EBITDA
The company reported a positive adjusted EBITDA of $75 million for 2024, a substantial improvement from a negative $4.4 million in 2023, indicating enhanced operational efficiency.
Loss of Medicare Coverage for DecisionDx-SCC
In January 2025, Medicare noncoverage for DecisionDx-SCC was finalized, effective April 24, 2025. This change is expected to impact reimbursement and presents a challenge for the company.
Decline in Mental Health Test Volume
The IDgenetix test report volumes and net revenues are projected to continue declining in 2025, with long-term performance remaining uncertain, posing a potential challenge for Castle Biosciences.
Gross Margin Impact
The anticipated loss of DecisionDx-SCC coverage is expected to affect gross margins, which are projected to be in the low to mid-70% range in 2025.
Forward-Looking Guidance
Looking ahead, Castle Biosciences anticipates total revenue between $280 million and $295 million for 2025, accounting for the potential loss of Medicare reimbursement for DecisionDx-SCC from April 2025. The company remains optimistic about its growth trajectory despite the challenges.
In summary, Castle Biosciences’ 2024 earnings call highlighted strong financial performance and growth potential, with significant revenue and test volume increases. Despite challenges such as the loss of Medicare coverage for DecisionDx-SCC and declines in the mental health segment, the company remains financially healthy and poised for continued growth.