Castle Biosciences (CSTL) 10-Q 9 Aug 21 2021 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Jun. 30, 2021	Jul. 30, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-38984
Entity Registrant Name	CASTLE BIOSCIENCES, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	77-0701774
Entity Address, Address Line One	505 S. Friendswood Drive
Entity Address, Address Line Two	Suite 401
Entity Address, City or Town	Friendswood
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77546
City Area Code	866
Local Phone Number	788-9007
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	CSTL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		25,167,365
Entity Central Index Key	0001447362
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current Assets
Cash and cash equivalents	$ 368,339	$ 409,852
Accounts receivable, net	17,817	12,759
Inventory	2,124	2,217
Prepaid expenses and other current assets	3,419	4,766
Total current assets	391,699	429,594
Long-term accounts receivable, net	1,313	1,096
Property and equipment, net	8,092	7,102
Intangible asset, net	32,798	0
Other assets – long-term	1,631	1,536
Total assets	435,533	439,328
Current Liabilities
Accounts payable	1,368	2,098
Accrued compensation	8,584	9,108
Medicare advance payment	6,177	6,615
Other accrued liabilities	2,525	3,055
Total current liabilities	18,654	20,876
Noncurrent portion of Medicare advance payment	0	1,735
Deferred rent and other liabilities	963	1,026
Total liabilities	19,617	23,637
Commitments and Contingencies (Note 10)
Stockholders’ Equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of June 30, 2021 and December 31, 2020; no shares issued and outstanding as of June 30, 2021 and December 31, 2020.	0	0
Common stock, $0.001 par value; 200,000,000 shares authorized as of June 30, 2021 and December 31, 2020; 25,164,053 and 24,812,487 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.	25	25
Additional paid-in capital	491,458	478,162
Accumulated deficit	(75,567)	(62,496)
Total stockholders’ equity	415,916	415,691
Total liabilities and stockholders’ equity	$ 435,533	$ 439,328

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	25,164,053	24,812,487
Common stock, shares outstanding (in shares)	25,164,053	24,812,487

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Abstract]
NET REVENUES	$ 22,758	$ 12,715	$ 45,571	$ 30,133
OPERATING EXPENSES AND OTHER OPERATING INCOME
Cost of sales (exclusive of amortization of acquired intangible asset)	3,697	2,146	6,725	4,537
Research and development	6,793	2,704	12,701	5,617
Selling, general and administrative	20,822	10,392	38,983	21,470
Amortization of acquired intangible asset	256	0	256	0
Other operating income	0	(1,882)	0	(1,882)
Total operating expenses, net	31,568	13,360	58,665	29,742
Operating (loss) income	(8,810)	(645)	(13,094)	391
Interest income	24	38	28	336
Interest expense	0	(769)	0	(1,533)
Loss before income taxes	(8,786)	(1,376)	(13,066)	(806)
Income tax expense	5	0	5	0
Net loss and comprehensive loss	(8,791)	(1,376)	(13,071)	(806)
Net loss and comprehensive loss	$ (8,791)	$ (1,376)	$ (13,071)	$ (806)
Loss per share:
Basic (in dollars per share)	$ (0.35)	$ (0.08)	$ (0.52)	$ (0.05)
Diluted (in dollars per share)	$ (0.35)	$ (0.08)	$ (0.52)	$ (0.05)
Weighted-average shares outstanding:
Basic (in shares)	25,091	17,544	25,002	17,458
Diluted (in shares)	25,091	17,544	25,002	17,458

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2019		0	17,130,907
Beginning balance at Dec. 31, 2019	$ 85,113	$ 0	$ 17	$ 137,308	$ (52,212)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock compensation expense	1,577			1,577
Exercise of common stock options (in shares)			32,602
Exercise of common stock options	71			71
Issuance of common stock under the employee stock purchase plan (in shares)			39,987
Issuance of common stock under the employee stock purchase plan	603			603
Net income (loss)	570				570
Ending balance (in shares) at Mar. 31, 2020		0	17,203,496
Ending balance at Mar. 31, 2020	87,934	$ 0	$ 17	139,559	(51,642)
Beginning balance (in shares) at Dec. 31, 2019		0	17,130,907
Beginning balance at Dec. 31, 2019	85,113	$ 0	$ 17	137,308	(52,212)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(806)
Ending balance (in shares) at Jun. 30, 2020		0	19,373,869
Ending balance at Jun. 30, 2020	157,622	$ 0	$ 19	210,621	(53,018)
Beginning balance (in shares) at Mar. 31, 2020		0	17,203,496
Beginning balance at Mar. 31, 2020	87,934	$ 0	$ 17	139,559	(51,642)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock compensation expense	1,653			1,653
Exercise of common stock options (in shares)			170,373
Exercise of common stock options	330			330
Public offering of common stock, net of underwriting discounts, commissions and offering costs (in shares)			2,000,000
Public offering of common stock, net of underwriting discounts, commissions and offering costs	69,081		$ 2	69,079
Net income (loss)	(1,376)				(1,376)
Ending balance (in shares) at Jun. 30, 2020		0	19,373,869
Ending balance at Jun. 30, 2020	157,622	$ 0	$ 19	210,621	(53,018)
Beginning balance (in shares) at Dec. 31, 2020		0	24,812,487
Beginning balance at Dec. 31, 2020	415,691	$ 0	$ 25	478,162	(62,496)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock compensation expense	4,913			4,913
Exercise of common stock options (in shares)			171,315
Exercise of common stock options	991			991
Issuance of common stock under the employee stock purchase plan (in shares)			70,711
Issuance of common stock under the employee stock purchase plan	1,233			1,233
Public offering of common stock, adjustment to offering costs	39			39
Net income (loss)	(4,280)				(4,280)
Ending balance (in shares) at Mar. 31, 2021		0	25,054,513
Ending balance at Mar. 31, 2021	418,587	$ 0	$ 25	485,338	(66,776)
Beginning balance (in shares) at Dec. 31, 2020		0	24,812,487
Beginning balance at Dec. 31, 2020	$ 415,691	$ 0	$ 25	478,162	(62,496)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options (in shares)	282,685
Net income (loss)	$ (13,071)
Ending balance (in shares) at Jun. 30, 2021		0	25,164,053
Ending balance at Jun. 30, 2021	415,916	$ 0	$ 25	491,458	(75,567)
Beginning balance (in shares) at Mar. 31, 2021		0	25,054,513
Beginning balance at Mar. 31, 2021	418,587	$ 0	$ 25	485,338	(66,776)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock compensation expense	4,766			4,766
Exercise of common stock options (in shares)			109,540
Exercise of common stock options	1,354			1,354
Net income (loss)	(8,791)				(8,791)
Ending balance (in shares) at Jun. 30, 2021		0	25,164,053
Ending balance at Jun. 30, 2021	$ 415,916	$ 0	$ 25	$ 491,458	$ (75,567)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
OPERATING ACTIVITIES
Net loss	$ (13,071)	$ (806)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	867	193
Stock compensation expense	9,679	3,230
Amortization of debt discounts and issuance costs	0	452
Other	69	0
Change in operating assets and liabilities:
Accounts receivable	(5,275)	2,337
Prepaid expenses and other current assets	1,347	234
Inventory	223	(430)
Other assets	(95)	(62)
Accounts payable	(683)	444
Accrued compensation	(523)	(1,127)
Medicare advance payment	(2,173)	8,350
Other accrued liabilities	(306)	263
Deferred rent and other liabilities	(128)	172
Net cash (used in) provided by operating activities	(10,069)	13,250
INVESTING ACTIVITIES
Purchases of property and equipment	(1,663)	(2,256)
Asset acquisition	(33,184)	0
Proceeds from sale of property and equipment	2	0
Net cash used in investing activities	(34,845)	(2,256)
FINANCING ACTIVITIES
Proceeds from public offering of common stock, net of underwriting discounts, commissions and offering costs	0	69,530
Payment of common stock offering costs	(336)	0
Repayments on term debt	0	(833)
Proceeds from exercise of common stock options	2,345	400
Proceeds from contributions to the employee stock purchase plan	1,392	823
Net cash provided by financing activities	3,401	69,920
NET CHANGE IN CASH AND CASH EQUIVALENTS	(41,513)	80,914
Beginning of period	409,852	98,845
End of period	368,339	179,759
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Accrued purchases of property and equipment	3	194
Property and equipment acquired with tenant improvement allowance	0	714
Common stock offering costs incurred but not paid	$ 0	$ 451

Organization and Description of

Organization and Description of Business	6 Months Ended
	Jun. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	Organization and Description of Business Castle Biosciences, Inc. (the ‘‘Company’’, “we”, “us”, or “our”) was incorporated in the state of Delaware on September 12, 2007. We are a commercial-stage dermatological cancer company focused on providing physicians and their patients with personalized, clinically actionable genomic information to make more accurate treatment decisions. We are based in Friendswood, Texas (a suburb of Houston, Texas) and essentially all of our laboratory operations are conducted at our facilities located in Phoenix, Arizona. Impact of COVID-19 Pandemic Since the COVID-19 pandemic began in March 2020, we have maintained uninterrupted business operations with normal turnaround times for delivery of test reports, but have experienced declines in test report volume in certain periods, which we believe is linked to delays and/or cancellations in patient visits in response to COVID-19, resulting in reduced diagnostic biopsies and thus reduced diagnoses of cutaneous melanoma. The extent to which COVID-19 may further impact our business, consolidated results of operations, consolidated financial condition and consolidated cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2021
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and a wholly owned subsidiary and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). All intercompany accounts and transactions have been eliminated in consolidation. Reclassification Certain prior year amounts in our condensed consolidated statements of operations and comprehensive loss have been reclassified to conform to the current year presentation. Specifically, we no longer present gross margin and therefore the cost of sales line is now presented within the operating expenses section of the condensed consolidated statements of operations and comprehensive loss. This reclassification had no impact on operating (loss) income, loss before income taxes, net loss, comprehensive loss or loss per share. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of June 30, 2021; the condensed consolidated statements of operations and comprehensive loss, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2021 and 2020; and the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our consolidated financial position as of June 30, 2021 and the results of our consolidated operations and our consolidated cash flows for the three and six months ended June 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2021 and 2020 are also unaudited. The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. The balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim consolidated financial statements. These consolidated financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 11, 2021. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realization of deferred tax assets, the useful lives and recoverability of long-lived assets, the valuation of acquired intangible assets and contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. We have considered the potential impact of the COVID-19 pandemic on our estimates and assumptions. The extent to which the COVID-19 pandemic may impact our estimates in future periods is uncertain and subject to change. Cash and Cash Equivalents including Concentrations of Credit Risk Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations. Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the institutions in which deposits are held. We have not experienced any losses on our cash or cash equivalents. Revenue Recognition Revenue is recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 606, Revenue from Contracts with Customers (‘‘ASC 606’’). In accordance with ASC 606, we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating physician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. See Note 3 for further details. Accounts Receivable and Allowance for Doubtful Accounts We classify accounts receivable balances that are expected to be paid more than one year from the balance sheet date as non-current assets. The estimated timing of payment utilized as a basis for classification as non-current is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments. We accrue an allowance for doubtful accounts against our accounts receivable when it is probable that an account is not collectible, based on write off history, credit risk of specific accounts, aging analysis and other information available on specific accounts. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Accounts receivable are written off when all efforts to collect the balance have been exhausted. Historically, our bad debt expense has not been significant. The allowance for doubtful accounts was zero as of June 30, 2021, and December 31, 2020. Adjustments for implicit price concessions attributable to variable consideration, as discussed above, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for doubtful accounts. Other Operating Income Other operating income for the three and six months ended June 30, 2020 consists of an automatic payment of $1.9 million we received on April 10, 2020 from the U.S. Department of Health and Human Services (“HHS”) pursuant to the Coronavirus Aid, Relief and Economic Security Act enacted on March 27, 2020, also known as the CARES Act, out of relief funds allocated by HHS to healthcare providers to reimburse healthcare related expenses or lost revenues attributable to COVID-19. Intangible Asset Our intangible asset consists of acquired developed technology. The intangible asset is considered to be finite-lived and is being amortized on a straight-line basis over its estimated useful life. Accrued Compensation We accrue for liabilities under discretionary employee and executive bonus plans. These estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals, and target bonus percentage levels. The board of directors reviews and evaluates the performance against these objectives and ultimately determines what discretionary payments are made. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of June 30, 2021 and December 31, 2020, we accrued $5,742,000 and $7,175,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the balance sheets based on the expected timing of payment. Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive loss was the same as our reported net loss for all periods presented. Accounting Pronouncements Yet to be Adopted We are currently an emerging growth company (“EGC”) within the meaning of the Jumpstart Our Business Startups Act, as amended, (the “JOBS Act”) and have elected to delay the adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, as permitted under the JOBS Act. However, because the market value of our common stock held by non-affiliates exceeded $700.0 million as of June 30, 2021, we will cease to be an EGC effective December 31, 2021. As such, upon our loss of status as an EGC, we will no longer be permitted to delay the adoption of new or revised accounting pronouncements, including the accounting pronouncements discussed below. In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes FASB ASC Topic 840, Leases, and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. For companies that are not EGCs’, ASU 2016-02 was effective for fiscal years beginning after December 15, 2018. For EGCs, the effective date of the ASU has been deferred to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. However, because we will no longer be an EGC effective December 31, 2021, we will adopt the new standard in the fourth quarter of 2021 using the modified retrospective method, under which we will apply Topic 842 to existing and new leases as of January 1, 2021, but prior periods will not be restated and will continue to be reported under Topic 840 guidance in effect during those periods. We do not expect the adoption of this standard to have a material impact on our consolidated statements of operations and comprehensive loss or our consolidated statements of cash flows but we expect to recognize right-of-use assets and liabilities for lease obligations associated with our operating leases. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“ASU 2016-13”), which requires the measurement of expected credit losses for financial instruments carried at amortized cost, such as accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For non-EGCs, ASU 2016-13 was effective for fiscal years beginning after December 15, 2019. For EGCs, the effective date of the ASU has been deferred to fiscal years beginning after December 15, 2022, including interim periods in those fiscal years. However, because we will no longer be an EGC effective December 31, 2021, we will adopt the new standard in the fourth quarter of 2021 under the modified retrospective method. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements, given our history of minimal bad debt expense relating to trade accounts receivable. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. For non-EGCs, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For EGCs, the standard is effective for fiscal years beginning after December 15,

Revenue

Revenue	6 Months Ended
	Jun. 30, 2021
Revenue from Contract with Customer [Abstract]
Revenue	Revenue All of our revenues from contracts with customers are associated with the provision of diagnostic and prognostic cancer testing services. Most of our revenues are attributable to DecisionDx®-Melanoma for cutaneous melanoma. We also provide a test for uveal melanoma, DecisionDx®-UM. We launched a test for patients with squamous cell carcinoma, DecisionDx®-SCC in August 2020 and launched a test for use in patients with suspicious pigmented lesions, DecisionDx® DiffDx™-Melanoma in November 2020. We began offering a test for difficult-to-diagnose melanocytic lesions, myPath Melanoma, following an asset acquisition completed in May 2021. Information on the disaggregation of revenues by our significant third-party payors is included under Payor Concentration below. Once we satisfy our performance obligations and bill for the service, the timing of the collection of payments may vary based on the payment practices of the third-party payor and the existence of contractually established reimbursement rates. Most of the payments for our services are made by third-party payors, including Medicare and commercial health insurance carriers. Certain contracts contain a contractual commitment of a reimbursement rate that differs from our list prices. 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. In addition, patients do not enter into direct agreements with us that commit them to pay any portion of the cost of the tests in the event that their insurance provider declines to reimburse us. We may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan. These situations may result in a delay in the collection of payments. The Medicare claims that are covered by policy under a Local Coverage Determination (‘‘LCD’’) are generally paid at the established rate by our Medicare contractor within 30 days from receipt. Medicare claims that were either submitted to Medicare prior to the LCD coverage commencement date or are not covered by the terms of the LCD 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 Administrative Law Judge (“ALJ”)). A successful appeal at any of these levels results in payment. In the absence of LCD coverage or contractually established reimbursements 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. Variable consideration attributable to these price concessions is measured at the expected value using the ‘‘most likely amount’’ method under ASC 606. The amounts are determined by historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as the judgment and actions of third parties. Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. 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. Variable consideration for Medicare claims that are not covered by an LCD, 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 is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues. Included in revenues for the three months ended June 30, 2021 and 2020 were $(166,000) and $2,291,000, respectively, of net (negative) positive revenue adjustments associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. Such amounts of variable consideration for the six months ended June 30, 2021 and 2020 were $5,092,000 and $1,048,000, respectively. These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration. Because our contracts with customers have an expected duration of one year or less, we have elected the practical expedient in ASC 606 to not disclose information about our remaining performance obligations. Any incremental costs to obtain contracts are recorded as selling, general and administrative expense as incurred due to the short duration of our contracts. Contract balances consisted of accounts receivable (both current and noncurrent) and the Medicare advance payment (discussed further below) as of June 30, 2021 and December 31, 2020. Medicare Advance Payment On April 16, 2020, we received an advance payment of $8.3 million (the “Advance Payment”) from the Centers for Medicare & Medicaid Services (“CMS”) under its Accelerated and Advance Payment Program, which was expanded to provide increased cash flow to service providers during the COVID-19 pandemic. Recoupment of the Advance Payment commenced in April 2021. For the first eleven months of recoupment, CMS will apply 25% of the Medicare payments otherwise owed to us against the balance of the Advance Payment. After this eleven-month period, CMS will recoup at a rate of 50% of the Medicare payments otherwise owed to us for an additional six months. If the Advance Payment is not fully recovered by CMS after this recoupment period, we will be required to repay any remaining balance. The remaining balance of the Advance Payment is recorded as a current liability on our consolidated balance sheet as of June 30, 2021. Through June 30, 2021, $2,173,000 has been applied against the balance of the Advance Payment. DecisionDx-Melanoma Claims Consolidation In June 2017, we submitted to the Office of Medicare Hearings and Appeals (‘‘OMHA’’) a formal request to participate in a program that OMHA developed with the intent of providing appellants a means to have large volumes of claim disputes adjudicated at an accelerated rate. The program consolidates outstanding claims at the ALJ level and uses a statistical-sampling approach where five ALJs will determine reimbursement results for a sample of claims which are then extrapolated to the universe of claims. The consolidation includes 2,698 DecisionDx-Melanoma claims dating from 2013 through spring 2017. Hearings were held in April 2019 with a supplemental hearing in May 2019. On March 12, 2020, OMHA issued a decision denying payment on all claims in the consolidation. We have filed an appeal to the decision, although no ruling on such appeal has been issued to date. In accordance with ASC 606 and consistent with prior periods, we have not recognized (fully constrained the variable consideration) any revenues attributable to these claims in our consolidated financial statements pending the outcome of this matter. Payor Concentration We rely upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of our diagnostic tests. Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows: Percentage of Revenues Six Months Ended Percentage of Accounts Receivable (current) Percentage of Accounts Receivable (non-current) 2021 2020 June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020 Medicare 57 % 58 % 27 % 15 % — % — % Medicare Advantage plans 25 % 29 % 35 % 40 % 18 % 25 % BlueCross BlueShield plans 7 % 6 % 22 % 26 % 47 % 44 %

Loss Per Share

Loss Per Share	6 Months Ended
	Jun. 30, 2021
Earnings Per Share [Abstract]
Loss Per Share	Loss Per Share Basic loss per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options or purchases under the 2019 Employee Stock Purchase Plan (“ESPP”). The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive. Due to us reporting a net loss for all periods presented, all potentially dilutive securities are antidilutive and are excluded from the computation of diluted loss per share for such periods. The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss earnings per share for the three and six months ended June 30, 2021 and 2020 because to do so would be antidilutive (in thousands): Three Months Ended Six Months Ended 2021 2020 2021 2020 Stock options and restricted stock units (“RSUs”) 3,374 2,728 3,417 2,715 Common stock warrants — 35 — 35 Employee stock purchase plan 56 107 66 105 Total 3,430 2,870 3,483 2,855

Asset Acquisition

Asset Acquisition	6 Months Ended
	Jun. 30, 2021
Business Combination and Asset Acquisition [Abstract]
Asset Acquisition	Asset Acquisition On May 28, 2021, we completed the acquisition of all of the equity of Myriad myPath, LLC, a laboratory in Salt Lake City where the myPath Melanoma test for difficult-to-diagnose melanocytic lesions was developed and offered, for a cash purchase price of $32,500,000. Following the completion of the acquisition, we became the sole provider of the myPath Melanoma test. Based on the guidance in ASC 805, Business Combinations , we concluded that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset and therefore the transaction represents an asset acquisition rather than a business combination. Asset acquisitions are accounted for by allocating the cost of the acquisition, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis without recognition of goodwill. We incurred $684,000 of direct transaction costs that were included in the cost of the acquisition. The allocation of the acquisition to individual assets resulted in an intangible asset representing developed technology of $33,054,000 and inventory of $130,000. The intangible asset has an estimated useful life of 12 years and is being amortized on a straight-line basis.

Property and Equipment, Net

Property and Equipment, Net	6 Months Ended
	Jun. 30, 2021
Property, Plant and Equipment [Abstract]
Property and Equipment, Net	Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): June 30, 2021 December 31, 2020 Leasehold improvements $ 4,419 $ 1,388 Lab equipment 2,583 2,037 Computer equipment 1,973 1,305 Furniture and fixtures 962 436 Construction in progress 403 3,590 Total 10,340 8,756 Less accumulated depreciation (2,248) (1,654) Property and equipment, net $ 8,092 $ 7,102 Depreciation expense was recorded in the unaudited condensed consolidated statements of operations and comprehensive loss as follows (in thousands): Three Months Ended Six Months Ended 2021 2020 2021 2020 Cost of sales (exclusive of amortization of acquired intangible asset) $ 111 $ 74 $ 213 $ 140 Research and development 64 3 108 5 Selling, general and administrative 203 25 290 48 Total $ 378 $ 102 $ 611 $ 193

Intangible Asset, Net

Intangible Asset, Net	6 Months Ended
	Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Asset, Net	Intangible Asset, Net Our intangible asset, net consists of the following (in thousands) : June 30, 2021 December 31, 2020 Gross carrying value Accumulated amortization Net Gross carrying value Accumulated amortization Net Developed technology $ 33,054 $ (256) $ 32,798 $ — $ — $ — The remaining useful life of the intangible asset was 11.9 years as of June 30, 2021. The estimated future aggregate amortization expense as of June 30, 2021 is as follows (in thousands): Years Ending December 31, 2021 (remainder of year) $ 1,388 2022 2,753 2023 2,753 2024 2,761 2025 2,753 Thereafter 20,390 Total $ 32,798

Other Accrued Liabilities

Other Accrued Liabilities	6 Months Ended
	Jun. 30, 2021
Payables and Accruals [Abstract]
Other Accrued Liabilities	Other Accrued Liabilities Other accrued liabilities consisted of the following (in thousands) : June 30, 2021 December 31, 2020 Accrued service fees $ 1,054 $ 1,891 Employee stock purchase plan contributions 692 536 Deferred employer payroll tax liability 277 276 Accrued royalties 214 151 Accrued state income taxes 10 62 Other 278 139 Total $ 2,525 $ 3,055

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2021
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements The table below provides information, by level within the fair value hierarchy, of our financial assets and financial liabilities that are accounted for at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands): As of June 30, 2021 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets: Money market funds (1) $ 367,858 $ — $ — $ 367,858 As of December 31, 2020 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets: Money market funds (1) $ 409,480 $ — $ — $ 409,480 (1) Classified as “Cash and cash equivalents” in the condensed consolidated balance sheets.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies From time to time, we may be involved in legal proceedings arising in the ordinary course of business. We believe there is no threatened litigation or litigation pending that could have, individually or in the aggregate, a material adverse effect on our financial position, results of operations or cash flows.

Common Stock Offerings

Common Stock Offerings	6 Months Ended
	Jun. 30, 2021
Equity [Abstract]
Common Stock Offerings	Common Stock OfferingsOn June 29, 2020, we issued and sold 2,000,000 shares of our common stock in a follow-on public offering at a price of $37.00 per share. We received $69,079,000 in net proceeds, after deducting underwriting discounts, commissions and offering costs (including $451,000 in offering costs that were incurred but not paid as of June 30, 2020). In connection with the offering, we granted the underwriters a 30-day option to purchase up to 300,000 additional shares of common stock at the public offering price, less underwriting discounts and commissions. On July 2, 2020, we issued and sold an additional 300,000 shares of common stock pursuant to the underwriters’ exercise in full of their option to purchase additional shares, which resulted in an additional net proceeds to us of $10,425,000. On December 18, 2020, we issued and sold 4,600,000 shares of our common stock in a follow-on public offering, including 600,000 shares associated with the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $58.00 per share. We received $250,201,000 in aggregate net proceeds, after deducting underwriting discounts and commissions and offering costs.

Stock Incentive Plans and Stock

Stock Incentive Plans and Stock-Based Compensation	6 Months Ended
	Jun. 30, 2021
Share-based Payment Arrangement [Abstract]
Stock Incentive Plans and Stock-Based Compensation	Stock Incentive Plans and Stock-Based Compensation Stock Incentive Plans Effective January 1, 2021, an additional 1,240,624 shares became available under our 2019 Equity Incentive Plan (the “2019 Plan”) pursuant to an automatic annual increase. As of June 30, 2021, 1,526,713 shares remained available for grant under the 2019 Plan. Stock Options Stock option activity under our stock plans for the six months ended June 30, 2021 is set forth below: Weighted-Average Stock Options Outstanding Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2020 3,369,502 $ 28.11 Granted 149,837 $ 69.02 Exercised (282,685) $ 8.22 Forfeited/Cancelled (106,831) $ 31.16 Balance as of June 30, 2021 3,129,823 $ 31.76 8.38 $ 130,366 Exercisable at June 30, 2021 (1) 932,684 $ 15.66 7.48 $ 53,790 (1) In addition, 39,203 unvested options outstanding at June 30, 2021 may be exercised prior to vesting under an early exercise provision in the stock option award agreement. In the event of such exercise, the shares obtained upon exercise would be restricted and subject to forfeiture prior to vesting. No such exercises have occurred to date. Restricted Stock Units The following table summarizes the Company’s RSU activity for the six months ended June 30, 2021: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2020 161,477 $ 59.16 Granted 42,071 68.97 Vested — — Forfeited/Cancelled (4,728) 62.46 Balance as of June 30, 2021 198,820 $ 61.16 Employee Stock Purchase Plan The ESPP provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 248,124 shares becoming available under the ESPP effective January 1, 2021. During the six months ended June 30, 2021, we issued 70,711 of common stock pursuant to scheduled purchases under the ESPP. As of June 30, 2021, 679,203 shares remained available for issuance under the ESPP. Determining Fair Value - Summary of Assumptions We use the Black-Scholes option pricing model to estimate the fair value of each option grant on the date of grant or any other measurement date. The following table sets forth the assumptions used to determine the fair value of stock options: Six Months Ended 2021 2020 Average expected term (years) 6 6 Expected stock price volatility 66.94% - 67.98% 59.15% - 63.80% Risk-free interest rate 0.51% - 1.09% 0.41% - 1.76% Dividend yield —% —% The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Six Months Ended 2021 2020 Average expected term (years) 1.2 1.2 Expected stock price volatility 68.43% - 86.50% 56.80% - 63.65% Risk-free interest rate 0.07% - 0.13% 0.84% - 0.95% Dividend yield —% —% The fair value of our common stock is also an assumption used to determine the fair value of stock options and purchase rights under the ESPP. The fair value of our common stock is the closing selling price per share of as reported on the Nasdaq Global Market on the date of grant or other relevant determination date. We use the closing price of our common stock on the date of grant to determine the fair value of RSUs. Stock-Based Compensation Expense Stock-based compensation expense related to stock options, RSUs and the ESPP is included in the statements of operations and comprehensive loss as follows (in thousands): Three Months Ended Six Months Ended 2021 2020 2021 2020 Cost of sales (exclusive of amortization of acquired intangible asset) $ 415 $ 200 $ 925 $ 406 Research and development 1,073 231 2,131 465 Selling, general and administrative 3,278 1,222 6,623 2,359 Total stock-based compensation expense $ 4,766 $ 1,653 $ 9,679 $ 3,230

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2021
Accounting Policies [Abstract]
Basis of Presentation	Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and a wholly owned subsidiary and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). All intercompany accounts and transactions have been eliminated in consolidation. Reclassification Certain prior year amounts in our condensed consolidated statements of operations and comprehensive loss have been reclassified to conform to the current year presentation. Specifically, we no longer present gross margin and therefore the cost of sales line is now presented within the operating expenses section of the condensed consolidated statements of operations and comprehensive loss. This reclassification had no impact on operating (loss) income, loss before income taxes, net loss, comprehensive loss or loss per share. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of June 30, 2021; the condensed consolidated statements of operations and comprehensive loss, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2021 and 2020; and the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our consolidated financial position as of June 30, 2021 and the results of our consolidated operations and our consolidated cash flows for the three and six months ended June 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2021 and 2020 are also unaudited. The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period. The balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim consolidated financial statements. These consolidated financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 11, 2021.
Use of Estimates	The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realization of deferred tax assets, the useful lives and recoverability of long-lived assets, the valuation of acquired intangible assets and contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. We have considered the potential impact of the COVID-19 pandemic on our estimates and assumptions. The extent to which the COVID-19 pandemic may impact our estimates in future periods is uncertain and subject to change.
Cash and Cash Equivalents including Concentrations of Credit Risk	Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations.
Revenue Recognition, Cost of Sales	Revenue is recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 606, Revenue from Contracts with Customers
Accounts Receivable	We classify accounts receivable balances that are expected to be paid more than one year from the balance sheet date as non-current assets. The estimated timing of payment utilized as a basis for classification as non-current is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments.
Allowance for Doubtful Accounts	We accrue an allowance for doubtful accounts against our accounts receivable when it is probable that an account is not collectible, based on write off history, credit risk of specific accounts, aging analysis and other information available on specific accounts. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Accounts receivable are written off when all efforts to collect the balance have been exhausted. Historically, our bad debt expense has not been significant. The allowance for doubtful accounts was zero as of June 30, 2021, and December 31, 2020. Adjustments for implicit price concessions attributable to variable consideration, as discussed above, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for doubtful accounts.
Intangible Asset	Our intangible asset consists of acquired developed technology. The intangible asset is considered to be finite-lived and is being amortized on a straight-line basis over its estimated useful life.
Accrued Compensation	We accrue for liabilities under discretionary employee and executive bonus plans. These estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals, and target bonus percentage levels. The board of directors reviews and evaluates the performance against these objectives and ultimately determines what discretionary payments are made. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of June 30, 2021 and December 31, 2020, we accrued $5,742,000 and $7,175,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the balance sheets based on the expected timing of payment.
Comprehensive Loss	Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.
Accounting Pronouncements Yet to be Adopted	We are currently an emerging growth company (“EGC”) within the meaning of the Jumpstart Our Business Startups Act, as amended, (the “JOBS Act”) and have elected to delay the adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies, as permitted under the JOBS Act. However, because the market value of our common stock held by non-affiliates exceeded $700.0 million as of June 30, 2021, we will cease to be an EGC effective December 31, 2021. As such, upon our loss of status as an EGC, we will no longer be permitted to delay the adoption of new or revised accounting pronouncements, including the accounting pronouncements discussed below. In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes FASB ASC Topic 840, Leases, and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. For companies that are not EGCs’, ASU 2016-02 was effective for fiscal years beginning after December 15, 2018. For EGCs, the effective date of the ASU has been deferred to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. However, because we will no longer be an EGC effective December 31, 2021, we will adopt the new standard in the fourth quarter of 2021 using the modified retrospective method, under which we will apply Topic 842 to existing and new leases as of January 1, 2021, but prior periods will not be restated and will continue to be reported under Topic 840 guidance in effect during those periods. We do not expect the adoption of this standard to have a material impact on our consolidated statements of operations and comprehensive loss or our consolidated statements of cash flows but we expect to recognize right-of-use assets and liabilities for lease obligations associated with our operating leases. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (“ASU 2016-13”), which requires the measurement of expected credit losses for financial instruments carried at amortized cost, such as accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For non-EGCs, ASU 2016-13 was effective for fiscal years beginning after December 15, 2019. For EGCs, the effective date of the ASU has been deferred to fiscal years beginning after December 15, 2022, including interim periods in those fiscal years. However, because we will no longer be an EGC effective December 31, 2021, we will adopt the new standard in the fourth quarter of 2021 under the modified retrospective method. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements, given our history of minimal bad debt expense relating to trade accounts receivable. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the general principles in Topic 740 and simplifies other areas of the existing guidance. For non-EGCs, ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For EGCs, the standard is effective for fiscal years beginning after December 15,

Revenue - (Tables)

Revenue - (Tables)	6 Months Ended
	Jun. 30, 2021
Revenue from Contract with Customer [Abstract]
Schedules of Concentration of Risk, by Risk Factor	Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows: Percentage of Revenues Six Months Ended Percentage of Accounts Receivable (current) Percentage of Accounts Receivable (non-current) 2021 2020 June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020 Medicare 57 % 58 % 27 % 15 % — % — % Medicare Advantage plans 25 % 29 % 35 % 40 % 18 % 25 % BlueCross BlueShield plans 7 % 6 % 22 % 26 % 47 % 44 %

Loss Per Share (Tables)

Loss Per Share (Tables)	6 Months Ended
	Jun. 30, 2021
Earnings Per Share [Abstract]
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss earnings per share for the three and six months ended June 30, 2021 and 2020 because to do so would be antidilutive (in thousands): Three Months Ended Six Months Ended 2021 2020 2021 2020 Stock options and restricted stock units (“RSUs”) 3,374 2,728 3,417 2,715 Common stock warrants — 35 — 35 Employee stock purchase plan 56 107 66 105 Total 3,430 2,870 3,483 2,855

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	6 Months Ended
	Jun. 30, 2021
Property, Plant and Equipment [Abstract]
Property, Plant and Equipment, Net	Property and equipment, net consisted of the following (in thousands): June 30, 2021 December 31, 2020 Leasehold improvements $ 4,419 $ 1,388 Lab equipment 2,583 2,037 Computer equipment 1,973 1,305 Furniture and fixtures 962 436 Construction in progress 403 3,590 Total 10,340 8,756 Less accumulated depreciation (2,248) (1,654) Property and equipment, net $ 8,092 $ 7,102 Depreciation expense was recorded in the unaudited condensed consolidated statements of operations and comprehensive loss as follows (in thousands): Three Months Ended Six Months Ended 2021 2020 2021 2020 Cost of sales (exclusive of amortization of acquired intangible asset) $ 111 $ 74 $ 213 $ 140 Research and development 64 3 108 5 Selling, general and administrative 203 25 290 48 Total $ 378 $ 102 $ 611 $ 193

Intangible Asset, Net (Tables)

Intangible Asset, Net (Tables)	6 Months Ended
	Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Summary of Finite-Lived Intangible Assets	Our intangible asset, net consists of the following (in thousands) : June 30, 2021 December 31, 2020 Gross carrying value Accumulated amortization Net Gross carrying value Accumulated amortization Net Developed technology $ 33,054 $ (256) $ 32,798 $ — $ — $ —
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense	The estimated future aggregate amortization expense as of June 30, 2021 is as follows (in thousands): Years Ending December 31, 2021 (remainder of year) $ 1,388 2022 2,753 2023 2,753 2024 2,761 2025 2,753 Thereafter 20,390 Total $ 32,798

Other Accrued Liabilities (Tabl

Other Accrued Liabilities (Tables)	6 Months Ended
	Jun. 30, 2021
Payables and Accruals [Abstract]
Schedule of Accrued Liabilities	Other accrued liabilities consisted of the following (in thousands) : June 30, 2021 December 31, 2020 Accrued service fees $ 1,054 $ 1,891 Employee stock purchase plan contributions 692 536 Deferred employer payroll tax liability 277 276 Accrued royalties 214 151 Accrued state income taxes 10 62 Other 278 139 Total $ 2,525 $ 3,055

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2021
Fair Value Disclosures [Abstract]
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	The table below provides information, by level within the fair value hierarchy, of our financial assets and financial liabilities that are accounted for at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands): As of June 30, 2021 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets: Money market funds (1) $ 367,858 $ — $ — $ 367,858 As of December 31, 2020 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets: Money market funds (1) $ 409,480 $ — $ — $ 409,480 (1) Classified as “Cash and cash equivalents” in the condensed consolidated balance sheets.

Stock Incentive Plans and Sto_2

Stock Incentive Plans and Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2021
Share-based Payment Arrangement [Abstract]
Schedule of Share-based Payment Arrangement on Stock Option Activity	Stock option activity under our stock plans for the six months ended June 30, 2021 is set forth below: Weighted-Average Stock Options Outstanding Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2020 3,369,502 $ 28.11 Granted 149,837 $ 69.02 Exercised (282,685) $ 8.22 Forfeited/Cancelled (106,831) $ 31.16 Balance as of June 30, 2021 3,129,823 $ 31.76 8.38 $ 130,366 Exercisable at June 30, 2021 (1) 932,684 $ 15.66 7.48 $ 53,790 (1) In addition, 39,203 unvested options outstanding at June 30, 2021 may be exercised prior to vesting under an early exercise provision in the stock option award agreement. In the event of such exercise, the shares obtained upon exercise would be restricted and subject to forfeiture prior to vesting. No such exercises have occurred to date.
Schedule of Share-based Payment Arrangement on Restricted Stock Units	The following table summarizes the Company’s RSU activity for the six months ended June 30, 2021: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2020 161,477 $ 59.16 Granted 42,071 68.97 Vested — — Forfeited/Cancelled (4,728) 62.46 Balance as of June 30, 2021 198,820 $ 61.16
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions	The following table sets forth the assumptions used to determine the fair value of stock options: Six Months Ended 2021 2020 Average expected term (years) 6 6 Expected stock price volatility 66.94% - 67.98% 59.15% - 63.80% Risk-free interest rate 0.51% - 1.09% 0.41% - 1.76% Dividend yield —% —%
Schedule of Share-based Payment Award, ESPP, Valuation Assumptions	The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Six Months Ended 2021 2020 Average expected term (years) 1.2 1.2 Expected stock price volatility 68.43% - 86.50% 56.80% - 63.65% Risk-free interest rate 0.07% - 0.13% 0.84% - 0.95% Dividend yield —% —%
Share-based Payment Arrangement, Expensed and Capitalized, Amount	Stock-based compensation expense related to stock options, RSUs and the ESPP is included in the statements of operations and comprehensive loss as follows (in thousands): Three Months Ended Six Months Ended 2021 2020 2021 2020 Cost of sales (exclusive of amortization of acquired intangible asset) $ 415 $ 200 $ 925 $ 406 Research and development 1,073 231 2,131 465 Selling, general and administrative 3,278 1,222 6,623 2,359 Total stock-based compensation expense $ 4,766 $ 1,653 $ 9,679 $ 3,230

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Narrative (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Allowance for doubtful accounts			$ 0	$ 0
Other operating income, CARES Act	$ 1,900,000	$ 1,900,000
Accrued bonuses			$ 5,742,000	$ 7,175,000

Revenue - Narrative (Details)

Revenue - Narrative (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021USD ($)	Jun. 30, 2020USD ($)	Jun. 30, 2021USD ($)claim	Jun. 30, 2020USD ($)	Apr. 16, 2020USD ($)
Revenue from Contract with Customer [Abstract]
Number of days contract with customer is generally paid			30 days
Variable consideration adjustments included in revenue	$ (166)	$ 2,291	$ 5,092	$ 1,048
Amount received from CMS under its accelerated and advance payment program					$ 8,300
Value applied against balance of the Advance Payment	$ 2,173		$ 2,173
Number of claims in adjudication process | claim			2,698

Revenue - Payor Concentration (

Revenue - Payor Concentration (Details) - Third-Party Payor Concentration Risk	6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Medicare | Percentage of Revenues
Concentration Risk [Line Items]
Concentration risk percentage	57.00%	58.00%
Medicare | Percentage of Accounts Receivable (current)
Concentration Risk [Line Items]
Concentration risk percentage	27.00%		15.00%
Medicare | Percentage of Accounts Receivable (non-current)
Concentration Risk [Line Items]
Concentration risk percentage	0.00%		0.00%
Medicare Advantage plans | Percentage of Revenues
Concentration Risk [Line Items]
Concentration risk percentage	25.00%	29.00%
Medicare Advantage plans | Percentage of Accounts Receivable (current)
Concentration Risk [Line Items]
Concentration risk percentage	35.00%		40.00%
Medicare Advantage plans | Percentage of Accounts Receivable (non-current)
Concentration Risk [Line Items]
Concentration risk percentage	18.00%		25.00%
BlueCross BlueShield plans | Percentage of Revenues
Concentration Risk [Line Items]
Concentration risk percentage	7.00%	6.00%
BlueCross BlueShield plans | Percentage of Accounts Receivable (current)
Concentration Risk [Line Items]
Concentration risk percentage	22.00%		26.00%
BlueCross BlueShield plans | Percentage of Accounts Receivable (non-current)
Concentration Risk [Line Items]
Concentration risk percentage	47.00%		44.00%

Loss Per Share - Schedule of An

Loss Per Share - Schedule of Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	3,430	2,870	3,483	2,855
Stock options and restricted stock units (“RSUs”)
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	3,374	2,728	3,417	2,715
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	0	35	0	35
Employee stock purchase plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	56	107	66	105

Asset Acquisition - Narrative (

Asset Acquisition - Narrative (Details) $ in Thousands	May 28, 2021USD ($)
Asset Acquisition [Line Items]
Asset acquisition, transaction costs	$ 684
Myriad myPath, LLC
Asset Acquisition [Line Items]
Payments to acquire productive assets	32,500
Inventory	130
Myriad myPath, LLC | Developed technology
Asset Acquisition [Line Items]
Intangible assets acquired	$ 33,054
Finite-lived intangible asset, useful life	12 years

Property and Equipment, Net - S

Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Total	$ 10,340	$ 8,756
Less accumulated depreciation	(2,248)	(1,654)
Property and equipment, net	8,092	7,102
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total	4,419	1,388
Lab equipment
Property, Plant and Equipment [Line Items]
Total	2,583	2,037
Computer equipment
Property, Plant and Equipment [Line Items]
Total	1,973	1,305
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total	962	436
Construction in progress
Property, Plant and Equipment [Line Items]
Total	$ 403	$ 3,590

Property and Equipment, Net -_2

Property and Equipment, Net - Summary of Depreciation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 378	$ 102	$ 611	$ 193
Cost of sales (exclusive of amortization of acquired intangible asset)
Property, Plant and Equipment [Line Items]
Depreciation and amortization	111	74	213	140
Research and development
Property, Plant and Equipment [Line Items]
Depreciation and amortization	64	3	108	5
Selling, general and administrative
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 203	$ 25	$ 290	$ 48

Intangible Asset, Net - Summary

Intangible Asset, Net - Summary of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Net	$ 32,798	$ 0
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	33,054	0
Accumulated amortization	(256)	0
Net	$ 32,798	$ 0

Intangible Asset, Net - Narrati

Intangible Asset, Net - Narrative (Details)	6 Months Ended
	Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Weighted-average remaining life (Years)	11 years 10 months 24 days

Intangible Asset - Future Amort

Intangible Asset - Future Amortization (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
2021 (remainder of year)	$ 1,388
2022	2,753
2023	2,753
2024	2,761
2025	2,753
Thereafter	20,390
Net	$ 32,798	$ 0

Other Accrued Liabilities (Deta

Other Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Accrued service fees	$ 1,054	$ 1,891
Employee stock purchase plan contributions	692	536
Deferred employer payroll tax liability	277	276
Accrued royalties	214	151
Accrued state income taxes	10	62
Other	278	139
Other accrued liabilities	$ 2,525	$ 3,055

Fair Value Measurements - Summa

Fair Value Measurements - Summary of Financial Assets and Liabilities at Fair Value (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 367,858	$ 409,480
Quoted Prices in Active Markets for Identical Items (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	367,858	409,480
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	$ 0	$ 0

Common Stock Offerings - Narrat

Common Stock Offerings - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	Dec. 18, 2020	Jul. 02, 2020	Jul. 02, 2020	Jun. 29, 2020	Jun. 30, 2021	Jun. 30, 2020
Class of Stock [Line Items]
Common stock offering price (in dollars per share)				$ 37
Common stock offering costs incurred but not paid					$ 0	$ 451
Follow-On Public Offering
Class of Stock [Line Items]
Common stock issued and sold (in shares)			300,000	2,000,000
Proceeds from sale of stock			$ 10,425	$ 69,079
Public Offering
Class of Stock [Line Items]
Common stock issued and sold (in shares)	4,600,000
Common stock offering price (in dollars per share)	$ 58
Proceeds from sale of stock	$ 250,201
Over-Allotment Option
Class of Stock [Line Items]
Common stock issued and sold (in shares)	600,000
Common stock option period				30 days
Option to purchase, number of shares (in shares)		300,000

Stock Incentive Plans and Sto_3

Stock Incentive Plans and Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	Jan. 01, 2021	Jun. 30, 2021	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding, nonvested (in shares)		39,203
Unrecognized compensation cost related to options		$ 55,235
Unrecognized compensation expense, period for recognition		3 years 1 month 6 days
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued during period (in shares)		70,711
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted, weighted average grant date fair value (in dollars per share)		$ 41.35	$ 18.69
2019 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in number of shares authorized for issuance (in shares)	1,240,624
Number of shares available for issuance (in shares)		1,526,713
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted, weighted average grant date fair value (in dollars per share)		$ 39.26	$ 12.70
Employee stock purchase plan | Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in number of shares authorized for issuance (in shares)	248,124
Number of shares available for issuance (in shares)		679,203

Stock Incentive Plans and Sto_4

Stock Incentive Plans and Stock-Based Compensation - Activity Under Stock Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2021
Stock Options Outstanding
Beginning balance (in shares)	3,369,502
Granted (in shares)	149,837
Exercised (in shares)	(282,685)
Forfeited/Cancelled (in shares)	(106,831)
Ending balance (in shares)	3,129,823
Options exercisable, number of options (in shares)	932,684
Exercise Price
Beginning balance (in dollars per share)	$ 28.11
Granted (in dollars per share)	69.02
Exercised (in dollars per share)	8.22
Forfeited/Cancelled (in dollars per share)	31.16
Ending balance (in dollars per share)	31.76
Options exercisable, weighted average exercise price (in dollars per share)	$ 15.66
Stock Option Activity, Additional Disclosures
Options outstanding, weighted average remaining contractual term	8 years 4 months 17 days
Options exercisable, weighted average remaining contractual term	7 years 5 months 23 days
Options outstanding, aggregate intrinsic value	$ 130,366
Options exercisable, aggregate intrinsic value	$ 53,790

Stock Incentive Plans and Sto_5

Stock Incentive Plans and Stock-Based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs)	6 Months Ended
	Jun. 30, 2021$ / sharesshares
Restricted Stock Units Outstanding
Beginning Balance (in shares) | shares	161,477
Granted (in shares) | shares	42,071
Vested (in shares) | shares	0
Forfeited/Cancelled (in shares) | shares	(4,728)
Ending Balance (in shares) | shares	198,820
Weighted-Average Grant Date Fair Value
Weighted average grant date fair value at beginning balance (in dollars per share) | $ / shares	$ 59.16
Granted (in dollars per share) | $ / shares	68.97
Vested (in dollars per share) | $ / shares	0
Forfeited / Cancelled (in dollars per share) | $ / shares	62.46
Weighted average grant date fair value at ending balance (in dollars per share) | $ / shares	$ 61.16

Stock Incentive Plans and Sto_6

Stock Incentive Plans and Stock-Based Compensation - Assumptions Used in Fair Value of Stock Options and ESPP (Details)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average expected term (years)	1 year 2 months 12 days	1 year 2 months 12 days
Expected stock price volatility, minimum	68.43%	56.80%
Expected stock price volatility, maximum	86.50%	63.65%
Risk-free interest rate, minimum	0.07%	0.84%
Risk-free interest rate, maximum	0.13%	0.95%
Dividend yield	0.00%	0.00%
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average expected term (years)	6 years	6 years
Expected stock price volatility, minimum	66.94%	59.15%
Expected stock price volatility, maximum	67.98%	63.80%
Risk-free interest rate, minimum	0.51%	0.41%
Risk-free interest rate, maximum	1.09%	1.76%
Dividend yield	0.00%	0.00%

Stock Incentive Plans and Sto_7

Stock Incentive Plans and Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 4,766	$ 1,653	$ 9,679	$ 3,230
Cost of sales (exclusive of amortization of acquired intangible asset)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	415	200	925	406
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	1,073	231	2,131	465
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 3,278	$ 1,222	$ 6,623	$ 2,359