Castle Biosciences (CSTL) 10-Q 2 Nov 23 2023 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2023	Oct. 26, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
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	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		26,910,548
Entity Central Index Key	0001447362
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents	$ 91,223	$ 122,948
Marketable investment securities	138,530	135,677
Accounts receivable, net	37,003	23,476
Inventory	5,769	3,980
Prepaid expenses and other current assets	7,097	6,207
Total current assets	279,622	292,288
Long-term accounts receivable, net	1,338	1,087
Property and equipment, net	22,273	14,315
Operating lease assets	11,613	12,181
Goodwill and other intangible assets, net	119,607	126,348
Other assets – long-term	1,566	1,110
Total assets	436,019	447,329
Current Liabilities
Accounts payable	6,929	4,731
Accrued compensation	22,405	24,358
Operating lease liabilities	1,091	1,777
Other accrued and current liabilities	5,899	5,262
Total current liabilities	36,324	36,128
Noncurrent operating lease liabilities	13,435	11,533
Deferred tax liability	441	428
Other liabilities	36	90
Total liabilities	50,236	48,179
Commitments and Contingencies (Note 11)
Stockholders’ Equity
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized as of September 30, 2023 and December 31, 2022; no shares issued and outstanding as of September 30, 2023 and December 31, 2022	0	0
Common stock, $0.001 par value per share; 200,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 26,890,488 and 26,553,681 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	27	27
Additional paid-in capital	601,618	560,409
Accumulated deficit	(215,791)	(160,905)
Accumulated other comprehensive loss	(71)	(381)
Total stockholders’ equity	385,783	399,150
Total liabilities and stockholders’ equity	$ 436,019	$ 447,329

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
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)	26,890,488	26,553,681
Common stock, shares outstanding (in shares)	26,890,488	26,553,681

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
NET REVENUES	$ 61,493	$ 37,011	$ 153,668	$ 98,701
OPERATING EXPENSES AND OTHER OPERATING INCOME
Cost of sales (exclusive of amortization of acquired intangible assets)	11,319	8,859	32,559	22,489
Research and development	12,923	10,907	40,624	33,594
Selling, general and administrative	44,619	36,626	136,062	104,577
Amortization of acquired intangible assets	2,272	2,306	6,742	6,051
Change in fair value of contingent consideration	0	(151)	0	(17,987)
Total operating expenses, net	71,133	58,547	215,987	148,724
Operating loss	(9,640)	(21,536)	(62,319)	(50,023)
Interest income	2,769	1,293	7,504	1,693
Interest expense	(2)	(6)	(9)	(13)
Loss before income taxes	(6,873)	(20,249)	(54,824)	(48,343)
Income tax expense (benefit)	32	0	62	(1,823)
Net loss	$ (6,905)	$ (20,249)	$ (54,886)	$ (46,520)
Loss per share, basic (in dollars per share)	$ (0.26)	$ (0.77)	$ (2.05)	$ (1.79)
Loss per share, diluted (in dollars per share)	$ (0.26)	$ (0.77)	$ (2.05)	$ (1.79)
Weighted-average shares outstanding, basic (in shares)	26,834	26,316	26,725	25,938
Weighted-average shares outstanding, diluted (in shares)	26,834	26,316	26,725	25,938

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (6,905)	$ (20,249)	$ (54,886)	$ (46,520)
Other comprehensive income (loss):
Net unrealized gain (loss) on marketable investment securities	73	(189)	310	(189)
Comprehensive loss	$ (6,832)	$ (20,438)	$ (54,576)	$ (46,709)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss
Preferred stock, shares outstanding (in shares) at Dec. 31, 2021		0
Beginning balance at Dec. 31, 2021	$ 411,740	$ 0	$ 25	$ 505,482	$ (93,767)	$ 0
Common stock, shares outstanding (in shares) at Dec. 31, 2021			25,378,520
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	8,419			8,419
Exercise of common stock options (in shares)			62,102
Exercise of common stock options	399			399
Issuance of common stock from vested restricted stock units and payment of employees' taxes (in shares)			2,466
Issuance of common stock from vested restricted stock units and payment of employees’ taxes	(56)			(56)
Issuance of common stock under the employee stock purchase plan (in shares)			42,332
Issuance of common stock under the employee stock purchase plan	1,457			1,457
Net loss	(24,623)				(24,623)
Preferred Stock, Shares Outstanding, Ending Balance at Mar. 31, 2022		0
Ending balance at Mar. 31, 2022	397,336	$ 0	$ 25	515,701	(118,390)	0
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2022			25,485,420
Preferred stock, shares outstanding (in shares) at Dec. 31, 2021		0
Beginning balance at Dec. 31, 2021	411,740	$ 0	$ 25	505,482	(93,767)	0
Common stock, shares outstanding (in shares) at Dec. 31, 2021			25,378,520
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net unrealized gain on marketable investment securities	(189)
Net loss	(46,520)
Preferred Stock, Shares Outstanding, Ending Balance at Sep. 30, 2022		0
Ending balance at Sep. 30, 2022	411,433	$ 0	$ 26	551,883	(140,287)	(189)
Common Stock, Shares, Outstanding, Ending Balance at Sep. 30, 2022			26,350,530
Preferred stock, shares outstanding (in shares) at Mar. 31, 2022		0
Beginning balance at Mar. 31, 2022	397,336	$ 0	$ 25	515,701	(118,390)	0
Common stock, shares outstanding (in shares) at Mar. 31, 2022			25,485,420
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	8,783			8,783
Exercise of common stock options (in shares)			36,634
Exercise of common stock options	110			110
Issuance of common stock from vested restricted stock units and payment of employees' taxes (in shares)			6,358
Issuance of common stock from vested restricted stock units and payment of employees’ taxes	(32)			(32)
Issuance of common stock in acquisition of business (in shares)			763,887
Issuance of common stock in acquisition of business	17,111		$ 1	17,110
Net loss	(1,648)				(1,648)
Preferred Stock, Shares Outstanding, Ending Balance at Jun. 30, 2022		0
Ending balance at Jun. 30, 2022	421,660	$ 0	$ 26	541,672	(120,038)	0
Common Stock, Shares, Outstanding, Ending Balance at Jun. 30, 2022			26,292,299
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	9,196			9,196
Exercise of common stock options (in shares)			17,093
Exercise of common stock options	166			166
Issuance of common stock from vested restricted stock units and payment of employees' taxes (in shares)			4,818
Issuance of common stock from vested restricted stock units and payment of employees’ taxes	(46)			(46)
Issuance of common stock under the employee stock purchase plan (in shares)			36,320
Issuance of common stock under the employee stock purchase plan	895			895
Net unrealized gain on marketable investment securities	(189)					(189)
Net loss	(20,249)				(20,249)
Preferred Stock, Shares Outstanding, Ending Balance at Sep. 30, 2022		0
Ending balance at Sep. 30, 2022	$ 411,433	$ 0	$ 26	551,883	(140,287)	(189)
Common Stock, Shares, Outstanding, Ending Balance at Sep. 30, 2022			26,350,530
Preferred stock, shares outstanding (in shares) at Dec. 31, 2022	0	0
Beginning balance at Dec. 31, 2022	$ 399,150	$ 0	$ 27	560,409	(160,905)	(381)
Common stock, shares outstanding (in shares) at Dec. 31, 2022	26,553,681		26,553,681
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	$ 13,525			13,525
Exercise of common stock options (in shares)			30,495
Exercise of common stock options	95			95
Issuance of common stock from vested restricted stock units and payment of employees' taxes (in shares)			24,835
Issuance of common stock from vested restricted stock units and payment of employees’ taxes	(314)			(314)
Issuance of common stock under the employee stock purchase plan (in shares)			77,190
Issuance of common stock under the employee stock purchase plan	1,652			1,652
Net unrealized gain on marketable investment securities	245					245
Net loss	(29,204)				(29,204)
Preferred Stock, Shares Outstanding, Ending Balance at Mar. 31, 2023		0
Ending balance at Mar. 31, 2023	$ 385,149	$ 0	$ 27	575,367	(190,109)	(136)
Common Stock, Shares, Outstanding, Ending Balance at Mar. 31, 2023			26,686,201
Preferred stock, shares outstanding (in shares) at Dec. 31, 2022	0	0
Beginning balance at Dec. 31, 2022	$ 399,150	$ 0	$ 27	560,409	(160,905)	(381)
Common stock, shares outstanding (in shares) at Dec. 31, 2022	26,553,681		26,553,681
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options (in shares)	49,757
Net unrealized gain on marketable investment securities	$ 310
Net loss	$ (54,886)
Preferred Stock, Shares Outstanding, Ending Balance at Sep. 30, 2023	0	0
Ending balance at Sep. 30, 2023	$ 385,783	$ 0	$ 27	601,618	(215,791)	(71)
Common Stock, Shares, Outstanding, Ending Balance at Sep. 30, 2023	26,890,488		26,890,488
Preferred stock, shares outstanding (in shares) at Mar. 31, 2023		0
Beginning balance at Mar. 31, 2023	$ 385,149	$ 0	$ 27	575,367	(190,109)	(136)
Common stock, shares outstanding (in shares) at Mar. 31, 2023			26,686,201
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	12,849			12,849
Exercise of common stock options (in shares)			15,606
Exercise of common stock options	89			89
Issuance of common stock from vested restricted stock units and payment of employees' taxes (in shares)			82,201
Issuance of common stock from vested restricted stock units and payment of employees’ taxes	(534)			(534)
Net unrealized gain on marketable investment securities	(8)					(8)
Net loss	(18,777)				(18,777)
Preferred Stock, Shares Outstanding, Ending Balance at Jun. 30, 2023		0
Ending balance at Jun. 30, 2023	378,768	$ 0	$ 27	587,771	(208,886)	(144)
Common Stock, Shares, Outstanding, Ending Balance at Jun. 30, 2023			26,784,008
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense	13,043			13,043
Exercise of common stock options (in shares)			3,656
Exercise of common stock options	13			13
Issuance of common stock from vested restricted stock units and payment of employees' taxes (in shares)			40,142
Issuance of common stock from vested restricted stock units and payment of employees’ taxes	(271)			(271)
Issuance of common stock under the employee stock purchase plan (in shares)			62,682
Issuance of common stock under the employee stock purchase plan	1,062			1,062
Net unrealized gain on marketable investment securities	73					73
Net loss	$ (6,905)				(6,905)
Preferred Stock, Shares Outstanding, Ending Balance at Sep. 30, 2023	0	0
Ending balance at Sep. 30, 2023	$ 385,783	$ 0	$ 27	$ 601,618	$ (215,791)	$ (71)
Common Stock, Shares, Outstanding, Ending Balance at Sep. 30, 2023	26,890,488		26,890,488

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
OPERATING ACTIVITIES
Net loss	$ (54,886)	$ (46,520)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	9,106	7,702
Stock-based compensation expense	39,417	26,398
Change in fair value of contingent consideration	0	(17,987)
Deferred income taxes	13	(1,839)
Accretion of discounts on marketable investment securities	(3,851)	(184)
Other	284	186
Change in operating assets and liabilities:
Accounts receivable	(13,779)	(5,678)
Prepaid expenses and other current assets	(892)	(1,870)
Inventory	(1,789)	(1,502)
Operating lease assets	(590)	694
Other assets	(455)	533
Accounts payable	2,693	2,155
Operating lease liabilities	1,093	(559)
Accrued compensation	(1,953)	3,669
Other accrued and current liabilities	1,376	(853)
Net cash used in operating activities	(24,213)	(35,655)
INVESTING ACTIVITIES
Purchases of property and equipment	(9,828)	(3,845)
Asset acquisition, adjustment to purchase price	0	547
Acquisition of business, net of cash and cash equivalents acquired	0	(26,966)
Proceeds from sale of property and equipment	10	9
Purchases of marketable investment securities	(136,693)	(131,808)
Proceeds from maturities of marketable investment securities	138,000	0
Net cash used in investing activities	(8,511)	(162,063)
FINANCING ACTIVITIES
Proceeds from exercise of common stock options	197	675
Payment of employees’ taxes on vested restricted stock units	(1,119)	(134)
Proceeds from contributions to the employee stock purchase plan	2,027	1,812
Repayment of principal portion of finance lease liabilities	(106)	(88)
Net cash provided by financing activities	999	2,265
NET CHANGE IN CASH AND CASH EQUIVALENTS	(31,725)	(195,453)
Beginning of period	122,948	329,633
End of period	91,223	134,180
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Accrued purchases of property and equipment	902	1,131
Common stock issued in acquisition of business	0	17,111
Contingent consideration in acquisition of business	0	1,528
Operating lease assets obtained in exchange for lease obligations	499	5,912
Property and equipment acquired with tenant improvement allowance	$ 1,281	$ 51

Organization and Description of

Organization and Description of Business	9 Months Ended
	Sep. 30, 2023
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 diagnostics company focused on providing clinicians and their patients with personalized, clinically actionable information to inform treatment decisions and improve health outcomes. We are based in Friendswood, Texas (a suburb of Houston, Texas) and our laboratory operations are conducted at our facilities located in Phoenix, Arizona and Pittsburgh, Pennsylvania. We have a history of recurring net losses and negative cash flows and as of September 30, 2023, we had an accumulated deficit of $215.8 million. We believe our $91.2 million of cash and cash equivalents and $138.5 million of marketable investment securities as of September 30, 2023, and anticipated revenue from our test reports, will be sufficient to meet our cash requirements through at least the 12-month period following the date that these unaudited condensed consolidated financial statements were issued.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2023
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 our wholly owned subsidiaries 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. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2023; the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of stockholders’ equity, each for the three and nine months ended September 30, 2023 and 2022; and the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. The unaudited interim condensed 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 September 30, 2023, the results of our consolidated operations for the three and nine months ended September 30, 2023 and 2022 and our consolidated cash flows for the nine months ended September 30, 2023 and 2022. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2023 and 2022 are also unaudited. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. The balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the unaudited interim consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 (the "2022 Form 10-K"). Use of Estimates The preparation of consolidated 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 consolidated 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 realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets and the valuation of contingent consideration and other 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. 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 financial institutions in which deposits are held. Marketable Investment Securities All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities (‘‘ASC 320’’). Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive loss within total stockholders’ equity, net of any related deferred income tax effects, on our condensed consolidated balance sheets. Premiums or discounts from par value are amortized to interest income over the life of the underlying investment. Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in interest income in the condensed consolidated statements of operations. Impairments of available-for-sale debt securities, if any, are recorded in our unaudited condensed consolidated statements of operations. See Notes 5 and 10 for further details. Revenue Recognition In accordance with ASC Topic 606, Revenue from Contracts with Customers (“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 clinician, 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 Credit Losses We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent 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 credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of September 30, 2023 and December 31, 2022. Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other , our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each fiscal year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. On June 2, 2023, a Medicare administrative contractor (“MAC”) finalized a local coverage determination (“LCD”) pursuant to which the DecisionDx-SCC test would no longer be covered by Medicare effective July 17, 2023. On June 5, 2023, our stock price decreased significantly and did not recover before June 30, 2023. In response to this trigger, we tested goodwill for impairment at June 30, 2023. We elected to bypass the optional qualitative assessment and proceeded directly to the quantitative assessment. In conducting our interim test, we concluded that our business consists of a single reporting unit. To measure the fair value of our reporting unit, we used a market approach whereby we calculated our total market capitalization on the impairment test date, based on the closing price of our common stock as reported on the Nasdaq Global Market, and applied a reasonable control premium. The control premium was based on an analysis of control premiums paid in recent acquisitions of companies in the same or similar industry as us. Our impairment test indicated that the fair value of our reporting unit exceeded its carrying value by 13% and therefore no impairment was indicated. In July 2023, the MAC suspended the LCD and then posted a new draft LCD for comment that is substantially the same as the LCD that was to become effective. During the third quarter of 2023, we continued to monitor our market capitalization against the carrying value of our reporting unit and did not observe any significant changes since our impairment test at June 30, 2023. We are currently performing our annual impairment test, as of October 1, 2023, and we have not identified any additional indicators of impairment to date. Accrued Compensation We accrue for liabilities under discretionary employee and executive bonus plans. Our 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. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. 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 September 30, 2023 and December 31, 2022, we accrued approximately $15,535,000 and $18,209,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the unaudited condensed consolidated balance sheets based on the expected timing of payment. Stock-Based Compensation Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the award’s vesting period (typically four years). PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements. 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. 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. Comprehensive loss is made up of net loss plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss).

Revenue

Revenue	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Revenue	Revenue All of our revenues from contracts with customers are associated with the provision of testing services. Our revenues are primarily attributable to our DecisionDx ® -Melanoma test for cutaneous melanoma. We also provide a test for patients with cutaneous squamous cell carcinoma (“SCC”), DecisionDx ® -SCC, a test for use in patients with suspicious pigmented lesions, MyPath ® Melanoma and DiffDx ® -Melanoma, a test for uveal melanoma (“UM”), DecisionDx ® -UM and a test for patients diagnosed with Barrett’s esophagus, the TissueCypher ® Barrett’s Esophagus Test. We also began offering a pharmacogenomics testing service focused on mental health, IDgenetix ® , following a business combination completed in April 2022. Information on the disaggregation of revenues is included 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. The payments for our services are primarily 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 Medicare are generally paid at a rate established on Medicare’s Clinical Laboratory Fee Schedule or by the respective Medicare contractor within 30 days from receipt. 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 Administrative Law Judge). A successful appeal at any of these levels may result in prompt payment. In the absence of Medicare coverage, contractually established reimbursements 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. 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 estimated using 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 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 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 September 30, 2023 and 2022 were $883,000 of net positive revenue adjustments and $277,000 of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. Such amounts of variable consideration for the nine months ended September 30, 2023 and 2022 were $3,085,000 and $1,850,000 of net negative revenue adjustments, 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 expenses as incurred due to the short duration of our contracts. Contract balances consisted solely of accounts receivable (both current and noncurrent) as of September 30, 2023 and December 31, 2022. Disaggregation of Revenues The table below provides the disaggregation of revenue by type (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Dermatologic (1) $ 51,151 $ 33,924 $ 130,097 $ 90,160 Non-Dermatologic (2) 10,342 3,087 23,571 8,541 Total net revenues $ 61,493 $ 37,011 $ 153,668 $ 98,701 (1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma). (2) Consists of TissueCypher Barrett’s Esophagus Test, DecisionDx-UM and IDgenetix. 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 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 Nine Months Ended Percentage of Accounts Receivable (current) as of Percentage of Accounts Receivable (noncurrent) as of 2023 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Medicare 49 % 52 % 23 % 28 % * * Payor A 14 % 12 % 19 % 14 % 16 % 16 % Payor B * * 10 % * 11 % * * Less than 10% There were no other third-party payors that individually accounted for more than 10% of our total revenue or accounts receivable for the periods shown in the table above.

Loss Per Share

Loss Per Share	9 Months Ended
	Sep. 30, 2023
Earnings Per Share [Abstract]
Loss Per Share	Loss Per ShareBasic 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, vesting of RSUs and PSUs or purchases under the ESPP. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Contingently issuable PSU awards are included in the computation of diluted loss per share when the applicable performance criteria would be met and the common shares would be issuable if the end of the reporting period were the end of the contingency period. However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive.Because we reported 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 per share for the three and nine months ended September 30, 2023 and 2022 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Stock options 3,302 3,542 3,339 3,538 RSUs and PSUs 3,422 1,743 3,403 1,444 ESPP 371 168 320 124 Total 7,095 5,453 7,062 5,106 In addition, in connection with our acquisition of AltheaDx, Inc. (“AltheaDx”) in April 2022, we may be required to issue shares of our common stock to satisfy the contingent consideration obligations, pending the outcome of certain commercial and regulatory milestones, as required by the definitive agreement to acquire AltheaDx. For purposes of calculating diluted loss per share, no such shares were assumed to have been issued because none of the applicable conditions have been met to date. See Note 10 for additional information.

Marketable Investment Securitie

Marketable Investment Securities	9 Months Ended
	Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]
Marketable Investment Securities	Marketable Investment Securities The following tables present our available-for-sale debt securities (in thousands): September 30, 2023 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities $ 138,601 $ — $ (71) $ 138,530 Total $ 138,601 $ — $ (71) $ 138,530 December 31, 2022 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities $ 136,058 $ — $ (381) $ 135,677 Total $ 136,058 $ — $ (381) $ 135,677 Although available to be sold to meet operating needs or otherwise, securities are generally held through maturity. We classify all investments as current assets, as these are readily available for use in current operations. The cost of securities sold is determined based on the specific identification method for purposes of recording gains and losses. There were no realized gains or losses on sales of investments for the three and nine months ended September 30, 2023 and 2022. We evaluated our investment portfolio under the available-for-sale debt securities impairment model guidance and determined our investment portfolio is comprised of low-risk, investment grade securities. As of September 30, 2023, unrealized losses on our available-for-sale investments are not attributed to credit risk. We believe that an allowance for credit losses is unnecessary because the unrealized losses on certain of our marketable investment securities are due to market factors. No credit-related or noncredit-related impairment losses were recorded for the three and nine months ended September 30, 2023 and 2022. The allowance for credit losses was zero as of September 30, 2023 and December 31, 2022. As of September 30, 2023, all of our available-for-sale debt securities had contractual maturities of one year or less. Accrued interest receivable is included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets. As of September 30, 2023 and December 31, 2022 the accrued interest receivable balance was immaterial.

Acquisition

Acquisition	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
Acquisition	Acquisition On April 26, 2022, we completed the acquisition of 100% of the equity interests in AltheaDx which offers the IDgenetix test that focuses on mental health. We acquired AltheaDx for $30.5 million in cash and $17.1 million in common stock issued, for total consideration of $47.6 million. The fair value of assets acquired and liabilities assumed primarily consisted of finite-lived intangible assets of $35.0 million, goodwill of $10.7 million, cash and cash equivalents of $3.5 million and deferred tax liabilities of $1.7 million. We have concluded that the transaction represents a business combination under ASC Topic 805, Business Combinations . The financial results of AltheaDx have been included in our unaudited condensed consolidated financial statements since the date of the acquisition. For further details refer to our consolidated financial statements included in our 2022 Form 10-K . The amount of revenue attributable to AltheaDx included in the unaudited consolidated statements of operations from the acquisition date was not material for the three and nine months ended September 30, 2022. The loss attributable to AltheaDx included in the unaudited consolidated statements of operations from the acquisition date was approximately $8,199,000 for the nine months ended September 30, 2022. This amount does not reflect transaction costs from the acquisition or the effects of the valuation allowance reduction discussed in Note 13. Transaction costs associated with the acquisition were $1,711,000 for the nine months ended September 30, 2022 and were recognized as expenses in the unaudited condensed consolidated statements of operations. During the three months ended September 30, 2022, we recognized an immaterial measurement period adjustment to cash consideration transferred, with a corresponding adjustment to goodwill. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information for the three and nine months ended September 30, 2022 combines our historical financial results and the results of AltheaDx, assuming that the companies were combined as of January 1, 2021, and includes adjustments for amortization expense from the acquired intangible assets and additional stock-based compensation expense. Non-recurring pro forma adjustments consist of acquisition-related transaction costs of $1,711,000 and an income tax benefit of $1,769,000, both assumed to have been recognized during the year ended December 31, 2021 and therefore removed from the nine months ended September 30, 2022 . The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2021 or (ii) the results of operations that are expected in future periods: Pro Forma Data Three Months Ended Nine Months Ended Net revenues $ 37,011 $ 99,253 Net loss $ (20,302) $ (52,247) Related Parties Derek J. Maetzold, our President and Chief Executive Officer, and a member of our board of directors, and Daniel M. Bradbury, the Chairperson of our board of directors, each served on the board of directors of AltheaDx until the acquisition of AltheaDx was completed, were direct or indirect beneficial owners of AltheaDx securities and received consideration in connection with our acquisition of AltheaDx. Further, Frank Stokes, our Chief Financial Officer; Tobin W. Juvenal, our Chief Commercial Officer; Kristen Oelschlager, our Chief Operating Officer and certain immediate family members of Mr. Maetzold and Ms. Oelschlager were direct or indirect beneficial owners of AltheaDx securities and received consideration in the transaction. These individuals may receive additional contingent consideration based on the achievement of certain commercial milestones relating to the 2022, 2023 and 2024 commercial milestones (“AltheaDx Earnout Payments”) if the relevant commercial and regulatory milestone events occur. As of September 30, 2023 and December 31, 2022, our contingent consideration liability for the AltheaDx Earnout Payments was zero. See Note 10 for additional information. Our entry into the definitive agreement to acquire AltheaDx was approved by our board of directors based upon the unanimous recommendation of a special transaction committee comprised entirely of independent members of our board of directors without any financial interest in AltheaDx or any conflict of interest with respect to the acquisition of AltheaDx.

Property and Equipment, Net

Property and Equipment, Net	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Property and Equipment, Net	Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): September 30, 2023 December 31, 2022 Lab equipment (1) $ 12,576 $ 9,721 Leasehold improvements 9,673 5,171 Computer equipment 3,942 4,336 Furniture and fixtures 2,352 1,660 Construction-in-progress 909 1,275 Total 29,452 22,163 Less accumulated depreciation (1) (7,179) (7,848) Property and equipment, net $ 22,273 $ 14,315 (1) As of September 30, 2023 and December 31, 2022, includes lab equipment under finance lease of $369 thousand and $369 thousand, respectively, and accumulated depreciation of $243 thousand and $137 thousand, respectively. Depreciation expense was recorded in the unaudited condensed consolidated statements of operations as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Cost of sales (exclusive of amortization of acquired intangible assets) $ 505 $ 267 $ 1,205 $ 621 Research and development 84 85 246 255 Selling, general and administrative 313 265 913 775 Total $ 902 $ 617 $ 2,364 $ 1,651

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets, Net	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Other Intangible Assets, Net	Goodwill and Other Intangible Assets, Net Goodwill The balance of our goodwill was $10.7 million as of September 30, 2023 and December 31, 2022. There were no accumulated impairments of goodwill as of September 30, 2023 or December 31, 2022. Other Intangible Assets, Net Our other intangible assets, net consist of the following (in thousands): September 30, 2023 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 125,317 $ (16,759) $ 108,558 12.3 Assembled workforce 563 (206) 357 3.4 Total other intangible assets, net $ 125,880 $ (16,965) $ 108,915 December 31, 2022 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 125,317 $ (10,102) $ 115,215 12.9 Assembled workforce 563 (122) 441 4.0 Total other intangible assets, net $ 125,880 $ (10,224) $ 115,656

Other Accrued and Current Liabi

Other Accrued and Current Liabilities	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
Other Accrued and Current Liabilities	Other Accrued and Current Liabilities Other accrued and current liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Clinical studies $ 3,020 $ 1,822 Accrued service fees 2,208 2,125 ESPP contributions 213 900 Other 458 415 Total $ 5,899 $ 5,262

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2023
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used in measuring fair value. There are three levels to the fair value hierarchy based on the reliability of inputs, as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or amounts recorded may not be indicative of the amount that we or holders of the instruments could realize in a current market exchange. The table below provides information, by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands): As of September 30, 2023 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 88,123 $ — $ — $ 88,123 U.S. government securities (2) $ 138,530 $ — $ — $ 138,530 Liabilities Contingent consideration (3) $ — $ — $ — $ — As of December 31, 2022 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 108,673 $ — $ — $ 108,673 U.S. government securities (2) $ 135,677 $ — $ — $ 135,677 Liabilities Contingent consideration (3) $ — $ — $ — $ — (1) Classified as “Cash and cash equivalents” in the unaudited condensed consolidated balance sheets. (2) Classified as “Marketable investment securities” in the unaudited condensed consolidated balance sheets. (3) Current portion, if any, classified as “Other accrued and current liabilities” in the unaudited condensed consolidated balance sheets. Contingent Consideration In connection with our acquisition of Cernostics, Inc. (“Cernostics”) in December 2021, we recorded a liability for contingent consideration of up to $50.0 million that could have been payable based on the achievement of certain commercial milestones relating to the year ending December 31, 2022 (“Cernostics Earnout Payments”). At our sole discretion, we could have settled Cernostics Earnout Payments in cash or shares of our common stock, subject to certain limitations. There were no Cernostics Earnout Payments that became payable because the commercial milestones were not achieved during the earnout period and the final valuation of the contingent consideration was assessed to be zero as of December 31, 2022. The fair value of the contingent consideration associated with our acquisition of Cernostics did not change for the three months ended September 30, 2022 and decreased by $18.3 million for the nine months ended September 30, 2022 with no similar activity for the same periods in 2023 . In connection with our acquisition of AltheaDx, we agreed to pay contingent consideration of up to $75.0 million relating to the AltheaDx Earnout Payments. The portion of the AltheaDx Earnout Payments associated with the commercial milestones for the year ended December 31, 2022 was not paid since the applicable commercial milestones were not met. This portion represented $35.0 million of the $75.0 million total potential payment obligation, exclusive of the catch-up payment in 2023 of $17.5 million, which will become payable if all 2023 commercial milestones are fully met. Therefore, as of September 30, 2023, we have a potential payment obligation of up to $57.5 million with respect to the remaining commercial milestones for 2023 and 2024. If the settlement of the remaining portion of the AltheaDx Earnout Payments would have occurred on September 30, 2023, no amounts would have been due because no commercial milestones had been achieved as of such date. The contingent consideration was classified as a Level 3 fair value measurement due to the use of significant unobservable inputs and a Monte Carlo simulation to determine its fair value. The Monte Carlo simulation uses projections of the commercial milestones for the applicable period as well as the corresponding targets and approximate timing of payment based on the terms of the arrangement. We recognized a gain of $0.2 million and a loss of $0.3 million during the three and nine months ended September 30, 2022, respectively, associated with the change in fair value of the preliminary AltheaDx contingent consideration. The valuation of the AltheaDx contingent consideration was zero as of September 30, 2023 and December 31, 2022, and no gains or losses were recorded associated with changes in fair value during the three and nine months ended September 30, 2023. The contingent consideration liability is remeasured at fair value at each reporting period taking into account any updated assumptions or changes in circumstances. Any changes in the fair value are recorded as gains or losses in our unaudited condensed consolidated statement of operations.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2023
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.

Stock Incentive Plans and Stock

Stock Incentive Plans and Stock-Based Compensation	9 Months Ended
	Sep. 30, 2023
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, 2023, an additional 1,327,684 shares became available under our 2019 Equity Incentive Plan (the “2019 Plan”) pursuant to an automatic annual increase. The 2019 Plan provides for automatic annual increases to the number of shares authorized for issuance, equal to 5% of our common shares outstanding as of the immediately preceding year end, through January 1, 2029. As of September 30, 2023, 124,383 shares remained available for grant under the 2019 Plan. On December 22, 2022, our board of directors approved the 2022 Inducement Plan (the “Inducement Plan”). Our Inducement Plan provides for the grant of RSU awards and other stock awards made as an inducement material to the grantee’s entering into employment with us to the extent such grantee was not previously an employee of ours or is entering into employment following a bona fide period of non-employment with us. As of September 30, 2023, there were 164,306 shares available for grant under the Inducement Plan. Stock Options Stock option activity under our stock plans for the nine months ended September 30, 2023 is set forth below: Weighted-Average Stock Options Exercise Remaining Aggregate Balance as of December 31, 2022 3,419,840 $ 35.11 Granted 170 $ 25.06 Exercised (49,757) $ 3.96 Forfeited/Cancelled (93,819) $ 45.24 Balance as of September 30, 2023 3,276,434 $ 35.29 6.8 $ 7,087 Exercisable at September 30, 2023 2,537,555 $ 32.21 6.5 $ 7,087 Restricted Stock Units RSUs represent the right to receive shares of our common stock at a specified future date, subject to vesting. Our RSUs generally vest annually from the grant date in four equal installments subject to the holder’s continued service with us. We issue new shares of common stock upon the vesting of RSUs. The following table summarizes our RSU activity for the nine months ended September 30, 2023: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2022 3,477,922 $ 27.56 Granted 315,950 $ 17.65 Vested (1) (200,824) $ 28.19 Forfeited/Cancelled (253,548) $ 26.45 Balance as of September 30, 2023 3,339,500 $ 26.67 (1) The aggregate number of shares withheld upon vesting for employee tax obligations was 53,646 for the nine months ended September 30, 2023. Performance-Based Restricted Stock Units PSUs represent the right to receive shares of our common stock contingent upon the achievement of certain financial performance measures. We issue new shares of common stock upon the vesting of PSUs. The following table summarizes our PSU activity for the nine months ended September 30, 2023: Performance-Based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2022 196,033 $ 23.23 Granted — $ — Vested — $ — Forfeited/Cancelled — $ — Balance as of September 30, 2023 196,033 $ 23.23 Retirement Policy In January 2023, our board of directors approved a retirement policy (the “Retirement Policy”) that provides for acceleration of a portion of unvested awards that were granted to certain eligible employees upon meeting age, service and notice requirements. We considered the adoption of the Retirement Policy to be a modification of existing awards under ASC Topic 718 , Compensation – Stock Compensation . The modification did not result in any incremental compensation cost. However, the adoption of the of the policy resulted in a new estimate of the requisite service period for certain awards, which we reassess at each balance sheet date. In connection with the Retirement Policy, we accelerated the recognition of compensation expense of $0.5 million and $1.6 million during the three and nine months ended September 30, 2023, respectively. 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 265,536 shares becoming available under the ESPP effective January 1, 2023. During the nine months ended September 30, 2023, we issued 139,872 shares of common stock pursuant to scheduled purchases under the ESPP. As of September 30, 2023, 940,263 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: Nine Months Ended 2023 2022 Average expected term (years) 5.0 5.9 Expected stock price volatility 75.57% - 76.01% 68.34% - 73.33% Risk-free interest rate 3.57% - 3.57% 1.54% - 3.03% Dividend yield —% —% The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Nine Months Ended 2023 2022 Average expected term (years) 1.3 1.2 Expected stock price volatility 93.17% - 130.95% 62.98% - 91.78% Risk-free interest rate 4.74% - 5.33% 0.60% - 3.45% Dividend yield —% —% We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs. Stock-Based Compensation Expense Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Cost of sales (exclusive of amortization of acquired intangible assets) $ 1,245 $ 975 $ 3,719 $ 2,725 Research and development 2,682 1,948 7,755 5,607 Selling, general and administrative 9,116 6,273 27,943 18,066 Total stock-based compensation expense $ 13,043 $ 9,196 $ 39,417 $ 26,398 For the nine months ended September 30, 2023 and 2022, the weighted-average grant date fair value of stock options was $15.99 and $14.34 per option, respectively, and the weighted-average grant date fair value of the purchase rights granted under the ESPP was $11.51 and $16.79 per share, respectively. As of September 30, 2023, the total unrecognized stock-based compensation cost related to outstanding awards was $96,424,000, which is expected to be recognized over a weighted-average period of 2.4 years. The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes In connection with our acquisition of AltheaDx in 2022, we recorded deferred tax liabilities based on our allocation of the fair values of assets acquired and liabilities assumed. As a result of these additional deferred tax liabilities , we recorded a $1,769,000 reduction to our existing valuation allowance on deferred tax assets, which was reflected in our income tax benefit on the condensed consolidated statements of operations for the nine months ended September 30, 2022 as a discrete item.

Subsequent Event

Subsequent Event	9 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Event	Subsequent EventOn July 10, 2023, following approval by our board of directors, we entered into a definitive agreement to purchase a plot of land located in Friendswood, Texas for a purchase price of $7.6 million, subject to certain adjustments. Under the agreement, we had the option to terminate the contract within 90 days, for any reason. On October 4, 2023, we amended the definitive agreement to extend the option period by an additional 30 days. The option period is being used to complete initial suitability diligence. Closing, if it should occur, is expected in late 2023.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’).
Consolidation	All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	The preparation of consolidated 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 consolidated 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 realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets and the valuation of contingent consideration and other 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.
Cash and Cash Equivalents	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.
Concentration of Credit Risk	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 financial institutions in which deposits are held.
Marketable Investment Securities	All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities
Revenue Recognition	In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”),
Accounts Receivable	We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent 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 Credit Losses	We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of September 30, 2023 and December 31, 2022. Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses.
Goodwill	Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other , our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each fiscal year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. On June 2, 2023, a Medicare administrative contractor (“MAC”) finalized a local coverage determination (“LCD”) pursuant to which the DecisionDx-SCC test would no longer be covered by Medicare effective July 17, 2023. On June 5, 2023, our stock price decreased significantly and did not recover before June 30, 2023. In response to this trigger, we tested goodwill for impairment at June 30, 2023. We elected to bypass the optional qualitative assessment and proceeded directly to the quantitative assessment. In conducting our interim test, we concluded that our business consists of a single reporting unit. To measure the fair value of our reporting unit, we used a market approach whereby we calculated our total market capitalization on the impairment test date, based on the closing price of our common stock as reported on the Nasdaq Global Market, and applied a reasonable control premium. The control premium was based on an analysis of control premiums paid in recent acquisitions of companies in the same or similar industry as us. Our impairment test indicated that the fair value of our reporting unit exceeded its carrying value by 13% and therefore no impairment was indicated. In July 2023, the MAC suspended the LCD and then posted a new draft LCD for comment that is substantially the same as the LCD that was to become effective. During the third quarter of 2023, we continued to monitor our market capitalization against the carrying value of our reporting unit and did not observe any significant changes since our impairment test at June 30, 2023. We are currently performing our annual impairment test, as of October 1, 2023, and we have not identified any additional indicators of impairment to date.
Accrued Compensation	We accrue for liabilities under discretionary employee and executive bonus plans. Our 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. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. 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 September 30, 2023 and December 31, 2022, we accrued approximately $15,535,000 and $18,209,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the unaudited condensed consolidated balance sheets based on the expected timing of payment.
Stock-Based Compensation	Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the award’s vesting period (typically four years). PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements. 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.
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. Comprehensive loss is made up of net loss plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss).

Revenue (Tables)

Revenue (Tables)	9 Months Ended
	Sep. 30, 2023
Revenue from Contract with Customer [Abstract]
Schedules of Disaggregation of Revenue	The table below provides the disaggregation of revenue by type (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Dermatologic (1) $ 51,151 $ 33,924 $ 130,097 $ 90,160 Non-Dermatologic (2) 10,342 3,087 23,571 8,541 Total net revenues $ 61,493 $ 37,011 $ 153,668 $ 98,701 (1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma).
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 Nine Months Ended Percentage of Accounts Receivable (current) as of Percentage of Accounts Receivable (noncurrent) as of 2023 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Medicare 49 % 52 % 23 % 28 % * * Payor A 14 % 12 % 19 % 14 % 16 % 16 % Payor B * * 10 % * 11 % * * Less than 10%

Loss Per Share (Tables)

Loss Per Share (Tables)	9 Months Ended
	Sep. 30, 2023
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 per share for the three and nine months ended September 30, 2023 and 2022 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Stock options 3,302 3,542 3,339 3,538 RSUs and PSUs 3,422 1,743 3,403 1,444 ESPP 371 168 320 124 Total 7,095 5,453 7,062 5,106

Marketable Investment Securit_2

Marketable Investment Securities (Tables)	9 Months Ended
	Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]
Schedule of Debt Securities, Available-for-Sale	The following tables present our available-for-sale debt securities (in thousands): September 30, 2023 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities $ 138,601 $ — $ (71) $ 138,530 Total $ 138,601 $ — $ (71) $ 138,530 December 31, 2022 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities $ 136,058 $ — $ (381) $ 135,677 Total $ 136,058 $ — $ (381) $ 135,677

Acquisition (Tables)

Acquisition (Tables)	9 Months Ended
	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
Schedule of Unaudited Pro forma Financial Information and Net Income	The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2021 or (ii) the results of operations that are expected in future periods: Pro Forma Data Three Months Ended Nine Months Ended Net revenues $ 37,011 $ 99,253 Net loss $ (20,302) $ (52,247)

Property and Equipment, Net (Ta

Property and Equipment, Net (Tables)	9 Months Ended
	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment, Net	Property and equipment, net consisted of the following (in thousands): September 30, 2023 December 31, 2022 Lab equipment (1) $ 12,576 $ 9,721 Leasehold improvements 9,673 5,171 Computer equipment 3,942 4,336 Furniture and fixtures 2,352 1,660 Construction-in-progress 909 1,275 Total 29,452 22,163 Less accumulated depreciation (1) (7,179) (7,848) Property and equipment, net $ 22,273 $ 14,315 (1) As of September 30, 2023 and December 31, 2022, includes lab equipment under finance lease of $369 thousand and $369 thousand, respectively, and accumulated depreciation of $243 thousand and $137 thousand, respectively. Depreciation expense was recorded in the unaudited condensed consolidated statements of operations as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Cost of sales (exclusive of amortization of acquired intangible assets) $ 505 $ 267 $ 1,205 $ 621 Research and development 84 85 246 255 Selling, general and administrative 313 265 913 775 Total $ 902 $ 617 $ 2,364 $ 1,651

Goodwill and Other Intangible_2

Goodwill and Other Intangible Assets, Net (Tables)	9 Months Ended
	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Finite-Lived Intangible Assets	Our other intangible assets, net consist of the following (in thousands): September 30, 2023 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 125,317 $ (16,759) $ 108,558 12.3 Assembled workforce 563 (206) 357 3.4 Total other intangible assets, net $ 125,880 $ (16,965) $ 108,915 December 31, 2022 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 125,317 $ (10,102) $ 115,215 12.9 Assembled workforce 563 (122) 441 4.0 Total other intangible assets, net $ 125,880 $ (10,224) $ 115,656

Other Accrued and Current Lia_2

Other Accrued and Current Liabilities (Tables)	9 Months Ended
	Sep. 30, 2023
Payables and Accruals [Abstract]
Schedule of Accrued And Current Liabilities	Other accrued and current liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Clinical studies $ 3,020 $ 1,822 Accrued service fees 2,208 2,125 ESPP contributions 213 900 Other 458 415 Total $ 5,899 $ 5,262

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2023
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 liabilities that are accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 (in thousands): As of September 30, 2023 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 88,123 $ — $ — $ 88,123 U.S. government securities (2) $ 138,530 $ — $ — $ 138,530 Liabilities Contingent consideration (3) $ — $ — $ — $ — As of December 31, 2022 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 108,673 $ — $ — $ 108,673 U.S. government securities (2) $ 135,677 $ — $ — $ 135,677 Liabilities Contingent consideration (3) $ — $ — $ — $ — (1) Classified as “Cash and cash equivalents” in the unaudited condensed consolidated balance sheets. (2) Classified as “Marketable investment securities” in the unaudited condensed consolidated balance sheets. (3) Current portion, if any, classified as “Other accrued and current liabilities” in the unaudited condensed consolidated balance sheets.

Stock Incentive Plans and Sto_2

Stock Incentive Plans and Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]
Schedule of Share-based Payment Arrangement on Stock Option Activity	Stock option activity under our stock plans for the nine months ended September 30, 2023 is set forth below: Weighted-Average Stock Options Exercise Remaining Aggregate Balance as of December 31, 2022 3,419,840 $ 35.11 Granted 170 $ 25.06 Exercised (49,757) $ 3.96 Forfeited/Cancelled (93,819) $ 45.24 Balance as of September 30, 2023 3,276,434 $ 35.29 6.8 $ 7,087 Exercisable at September 30, 2023 2,537,555 $ 32.21 6.5 $ 7,087
Schedule of Share-based Payment Arrangement on Restricted Stock Units	The following table summarizes our RSU activity for the nine months ended September 30, 2023: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2022 3,477,922 $ 27.56 Granted 315,950 $ 17.65 Vested (1) (200,824) $ 28.19 Forfeited/Cancelled (253,548) $ 26.45 Balance as of September 30, 2023 3,339,500 $ 26.67 (1) The aggregate number of shares withheld upon vesting for employee tax obligations was 53,646 for the nine months ended September 30, 2023.
Schedule of Share-Based Payment Arrangement, Performance Shares, Activity	The following table summarizes our PSU activity for the nine months ended September 30, 2023: Performance-Based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2022 196,033 $ 23.23 Granted — $ — Vested — $ — Forfeited/Cancelled — $ — Balance as of September 30, 2023 196,033 $ 23.23
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: Nine Months Ended 2023 2022 Average expected term (years) 5.0 5.9 Expected stock price volatility 75.57% - 76.01% 68.34% - 73.33% Risk-free interest rate 3.57% - 3.57% 1.54% - 3.03% 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: Nine Months Ended 2023 2022 Average expected term (years) 1.3 1.2 Expected stock price volatility 93.17% - 130.95% 62.98% - 91.78% Risk-free interest rate 4.74% - 5.33% 0.60% - 3.45% Dividend yield —% —%
Schedule of Share-based Payment Arrangement, Expensed and Capitalized, Amount	Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Cost of sales (exclusive of amortization of acquired intangible assets) $ 1,245 $ 975 $ 3,719 $ 2,725 Research and development 2,682 1,948 7,755 5,607 Selling, general and administrative 9,116 6,273 27,943 18,066 Total stock-based compensation expense $ 13,043 $ 9,196 $ 39,417 $ 26,398

Organization and Description _2

Organization and Description of Business (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated deficit	$ 215,791	$ 160,905
Cash and cash equivalents	91,223	122,948
Marketable investment securities	$ 138,530	$ 135,677

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Narrative (Details) - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Allowance for credit losses	$ 0	$ 0
Percentage of fair value in excess of carrying value (percent)	13%
Goodwill impairment	$ 0
Accrued bonuses	$ 15,535,000	$ 18,209,000
Vesting period	4 years

Revenue - Narrative (Details)

Revenue - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue from Contract with Customer [Abstract]
Number of days contract with customer is generally paid			30 days
Variable consideration adjustments included in revenue	$ 883	$ (277)	$ (3,085)	$ (1,850)

Revenue - Disaggregation of Rev

Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total net revenues	$ 61,493	$ 37,011	$ 153,668	$ 98,701
Dermatologic
Disaggregation of Revenue [Line Items]
Total net revenues	51,151	33,924	130,097	90,160
Non-Dermatologic
Disaggregation of Revenue [Line Items]
Total net revenues	$ 10,342	$ 3,087	$ 23,571	$ 8,541

Revenue - Concentration of Risk

Revenue - Concentration of Risk, by Risk Factor (Details) - Third-Party Payor Concentration Risk	9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Medicare | Percentage of Revenues
Concentration Risk [Line Items]
Concentration risk percentage	49%	52%
Medicare | Percentage of Accounts Receivable (current)
Concentration Risk [Line Items]
Concentration risk percentage	23%		28%
Payor A | Percentage of Revenues
Concentration Risk [Line Items]
Concentration risk percentage	14%	12%
Payor A | Percentage of Accounts Receivable (current)
Concentration Risk [Line Items]
Concentration risk percentage	19%		14%
Payor A | Percentage of Accounts Receivable (noncurrent)
Concentration Risk [Line Items]
Concentration risk percentage	16%		16%
Payor B | Percentage of Accounts Receivable (current)
Concentration Risk [Line Items]
Concentration risk percentage	10%
Payor B | Percentage of Accounts Receivable (noncurrent)
Concentration Risk [Line Items]
Concentration risk percentage	11%

Loss Per Share - (Details)

Loss Per Share - (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	7,095	5,453	7,062	5,106
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	3,302	3,542	3,339	3,538
RSUs and PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	3,422	1,743	3,403	1,444
ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	371	168	320	124

Marketable Investment Securit_3

Marketable Investment Securities - Schedule of Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	$ 138,601	$ 136,058
Unrealized gains	0	0
Unrealized losses	(71)	(381)
Estimated Fair Value	138,530	135,677
U.S. government securities
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	138,601	136,058
Unrealized gains	0	0
Unrealized losses	(71)	(381)
Estimated Fair Value	$ 138,530	$ 135,677

Marketable Investment Securit_4

Marketable Investment Securities - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Realized gain (loss) on sale of investment	$ 0	$ 0	$ 0	$ 0
Impairment loss	0	$ 0	0	$ 0
Allowance for credit loss	0		0		$ 0
Accrued interest receivable	$ 0		$ 0		$ 0

Acquisition - Narrative (Detail

Acquisition - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 26, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2022
Business Acquisition [Line Items]
Goodwill		$ 10,700		$ 10,700			$ 10,700
Income tax (expense) benefit		(32)	$ 0	(62)	$ 1,823
AltheaDx, Inc
Business Acquisition [Line Items]
Percentage of voting interest acquired	100%
Payments to acquire business	$ 30,500
Consideration transferred, equity interests transferred	17,100
Total consideration transferred	47,600
Finite-lived intangible assets acquired	35,000
Goodwill	10,700
Cash acquired	3,500
Deferred tax liability acquired	$ 1,700
Loss from acquisition date					8,199
Contingent consideration in acquisition of business		$ 0		$ 0			$ 0
AltheaDx, Inc | Acquisition-related Costs
Business Acquisition [Line Items]
Transaction costs expensed					$ 1,711	$ 1,711
AltheaDx, Inc | Income Tax Adjustment
Business Acquisition [Line Items]
Income tax (expense) benefit						$ 1,769

Acquisition - Schedule of Unaud

Acquisition - Schedule of Unaudited Pro forma Financial Information and Net Income (Details) - AltheaDx, Inc - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Business Acquisition [Line Items]
Net revenues	$ 37,011	$ 99,253
Net loss	$ (20,302)	$ (52,247)

Property and Equipment, Net - P

Property and Equipment, Net - Property and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Total	$ 29,452	$ 22,163
Less accumulated depreciation	(7,179)	(7,848)
Property and equipment, net	22,273	14,315
Lab equipment
Property, Plant and Equipment [Line Items]
Total	12,576	9,721
Finance lease, right-of-use asset, before accumulated amortization	369	369
Finance lease, right-of-use asset, accumulated amortization	243	137
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total	9,673	5,171
Computer equipment
Property, Plant and Equipment [Line Items]
Total	3,942	4,336
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total	2,352	1,660
Construction-in-progress
Property, Plant and Equipment [Line Items]
Total	$ 909	$ 1,275

Property and Equipment, Net - D

Property and Equipment, Net - Depreciation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Line Items]
Depreciation	$ 902	$ 617	$ 2,364	$ 1,651
Cost of sales (exclusive of amortization of acquired intangible assets)
Property, Plant and Equipment [Line Items]
Depreciation	505	267	1,205	621
Research and development
Property, Plant and Equipment [Line Items]
Depreciation	84	85	246	255
Selling, general and administrative
Property, Plant and Equipment [Line Items]
Depreciation	$ 313	$ 265	$ 913	$ 775

Goodwill and Other Intangible_3

Goodwill and Other Intangible Assets, Net - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 10,700,000		$ 10,700,000		$ 10,700,000
Goodwill accumulated impairment	0		0		$ 0
Amortization of acquired intangible assets	$ 2,272,000	$ 2,306,000	$ 6,742,000	$ 6,051,000

Goodwill and Other Intangible_4

Goodwill and Other Intangible Assets, Net - Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	$ 125,880	$ 125,880
Accumulated amortization	(16,965)	(10,224)
Net	108,915	115,656
Developed technology
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	125,317	125,317
Accumulated amortization	(16,759)	(10,102)
Net	$ 108,558	$ 115,215
Weighted-Average Remaining Life (in years)	12 years 3 months 18 days	12 years 10 months 24 days
Assembled workforce
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	$ 563	$ 563
Accumulated amortization	(206)	(122)
Net	$ 357	$ 441
Weighted-Average Remaining Life (in years)	3 years 4 months 24 days	4 years

Other Accrued and Current Lia_3

Other Accrued and Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Clinical studies	$ 3,020	$ 1,822
Accrued service fees	2,208	2,125
ESPP contributions	213	900
Other	458	415
Total	$ 5,899	$ 5,262

Fair Value Measurements - Fair

Fair Value Measurements - Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	$ 138,530	$ 135,677
U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	138,530	135,677
Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	88,123	108,673
Contingent consideration	0	0
Fair Value, Recurring | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	138,530	135,677
Fair Value, Recurring | 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	88,123	108,673
Contingent consideration	0	0
Fair Value, Recurring | Quoted Prices in Active Markets for Identical Items (Level 1) | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	138,530	135,677
Fair Value, Recurring | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0	0
Contingent consideration	0	0
Fair Value, Recurring | Significant Other Observable Inputs (Level 2) | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Fair Value, Recurring | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Money market funds	0	0
Contingent consideration	0	0
Fair Value, Recurring | Significant Unobservable Inputs (Level 3) | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale debt securities	$ 0	$ 0

Fair Value Measurements - Narra

Fair Value Measurements - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Apr. 26, 2022	Dec. 31, 2021
AltheaDx, Inc
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Additional consideration payable based on achievement of certain commercial milestones						$ 75,000,000
Contingent consideration, portion not paid					$ 35,000,000
Contingent consideration, catch up payment			$ 17,500,000
Potential payment obligation	$ 57,500,000		57,500,000
Earnout payment, amount due	0		0
Recognized (gain) loss of contingent consideration	0	$ (200,000)	0	$ 300,000
Value of contingent consideration	0		0		0
Cernostics, Inc.
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Additional consideration payable based on achievement of certain commercial milestones							$ 50,000,000
Earnout payments					0
Contingent consideration					$ 0
Increase (decrease) in amount of contingent consideration	$ 0	$ 0	$ 0	$ (18,300,000)

Stock Incentive Plans and Sto_3

Stock Incentive Plans and Stock-Based Compensation - Narrative (Details) $ / shares in Units, $ in Thousands		3 Months Ended	9 Months Ended
	Jan. 01, 2023 shares	Sep. 30, 2023 USD ($) shares	Sep. 30, 2023 USD ($) vesting_period $ / shares shares	Sep. 30, 2022 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Accelerated recognition of compensation expense | $		$ 500	$ 1,600
Unrecognized compensation costs | $		$ 96,424	$ 96,424
Unrecognized compensation expense, period for recognition			2 years 4 months 24 days
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grant date vesting in period | vesting_period			4
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) | $ / shares			$ 15.99	$ 14.34
2019 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in number of shares authorized for issuance (in shares)	1,327,684
Percentage of common shares outstanding			5%
Number of shares available for grant (in shares)		124,383	124,383
2022 Inducement Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant (in shares)		164,306	164,306
Employee stock purchase plan | ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in number of shares authorized for issuance (in shares)	265,536
Number of shares available for grant (in shares)		940,263	940,263
Shares issued during period (in shares)			139,872
Options granted, weighted average grant date fair value (in dollars per share) | $ / shares			$ 11.51	$ 16.79

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	9 Months Ended
	Sep. 30, 2023
Stock Options Outstanding
Beginning balance (in shares)	3,419,840
Granted (in shares)	170
Exercised (in shares)	(49,757)
Forfeited/Cancelled (in shares)	(93,819)
Ending balance (in shares)	3,276,434
Options exercisable, number of options (in shares)	2,537,555
Exercise Price
Beginning balance (in dollars per share)	$ 35.11
Granted (in dollars per share)	25.06
Exercised (in dollars per share)	3.96
Forfeited/Cancelled (in dollars per share)	45.24
Ending balance (in dollars per share)	35.29
Options exercisable, weighted average exercise price (in dollars per share)	$ 32.21
Stock Option Activity, Additional Disclosures
Options outstanding, weighted average remaining contractual term	6 years 9 months 18 days
Options exercisable, weighted average remaining contractual term	6 years 6 months
Options outstanding, aggregate intrinsic value	$ 7,087
Options exercisable, aggregate intrinsic value	$ 7,087

Stock Incentive Plans and Sto_5

Stock Incentive Plans and Stock Based Compensation - Restricted Stock Units and Performance Stock Units (Details)	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Restricted Stock Units (RSUs)
Restricted Stock Units Outstanding
Beginning Balance (in shares)	3,477,922
Granted (in shares)	315,950
Vested (in shares)	(200,824)
Forfeited/Cancelled (in shares)	(253,548)
Ending Balance (in shares)	3,339,500
Weighted-Average Grant Date Fair Value
Weighted average grant date fair value at beginning balance (in dollars per share) | $ / shares	$ 27.56
Granted (in dollars per share) | $ / shares	17.65
Vested (in dollars per share) | $ / shares	28.19
Forfeited / Cancelled (in dollars per share) | $ / shares	26.45
Weighted average grant date fair value at ending balance (in dollars per share) | $ / shares	$ 26.67
Withheld upon vesting for employee tax obligations (in shares)	53,646
Performance-Based Restricted Stock Units
Restricted Stock Units Outstanding
Beginning Balance (in shares)	196,033
Granted (in shares)	0
Vested (in shares)	0
Forfeited/Cancelled (in shares)	0
Ending Balance (in shares)	196,033
Weighted-Average Grant Date Fair Value
Weighted average grant date fair value at beginning balance (in dollars per share) | $ / shares	$ 23.23
Granted (in dollars per share) | $ / shares	0
Vested (in dollars per share) | $ / shares	0
Forfeited / Cancelled (in dollars per share) | $ / shares	0
Weighted average grant date fair value at ending balance (in dollars per share) | $ / shares	$ 23.23

Stock Incentive Plans and Sto_6

Stock Incentive Plans and Stock-Based Compensation - Assumptions Used in Fair Value of Stock Options and ESPP (Details)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average expected term (years)	1 year 3 months 18 days	1 year 2 months 12 days
Expected stock price volatility, minimum	93.17%	62.98%
Expected stock price volatility, maximum	130.95%	91.78%
Risk-free interest rate, minimum	4.74%	0.60%
Risk-free interest rate, maximum	5.33%	3.45%
Dividend yield	0%	0%
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Average expected term (years)	5 years	5 years 10 months 24 days
Expected stock price volatility, minimum	75.57%	68.34%
Expected stock price volatility, maximum	76.01%	73.33%
Risk-free interest rate, minimum	3.57%	1.54%
Risk-free interest rate, maximum	3.57%	3.03%
Dividend yield	0%	0%

Stock Incentive Plans and Sto_7

Stock Incentive Plans and Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 13,043	$ 9,196	$ 39,417	$ 26,398
Cost of sales (exclusive of amortization of acquired intangible assets)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	1,245	975	3,719	2,725
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	2,682	1,948	7,755	5,607
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 9,116	$ 6,273	$ 27,943	$ 18,066

Income Taxes - (Details)

Income Taxes - (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
AltheaDx, Inc
Business Acquisition [Line Items]
Reduction of existing valuation allowance on deferred tax assets	$ 1,769

Subsequent Event (Details)

Subsequent Event (Details) - Plot of Land, Friendswood Texas - USD ($) $ in Millions	Oct. 04, 2023	Jul. 10, 2023
Subsequent Event [Line Items]
Purchase of land		$ 7.6
Option to terminate contract		90 days
Subsequent Event
Subsequent Event [Line Items]
Option to terminate contract, extended period	30 days