CSTL - Earnings call transcript Q3 2024 | Castle Biosciences, Inc.

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Operator

Good afternoon, and welcome to Castle Biosciences Third Quarter 2024 Conference Call.

As a reminder, today's call is being recorded.

We will begin today's call with opening remarks and introductions, followed by a question-and-answer session. I would like to turn the call over to Camilla Zuckero, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Camilla Zuckero

Thank you, operator. everyone. afternoon, Good Biosciences' Castle XXXX Results Financial Welcome Third Call. Conference to Quarter

recorded President, of are Financial Executive Information Therefore, speaks if today the X, me listening or today, and as Officer, this of only Castle's Stokes. you Chief Joining XXXX. and Founder, call Chief call. may November the conclusion Investor call accurate. A be reading Maetzold; of Officer, Frank the to are longer the approximately on for this replay Derek transcript website of on of company's call, will today's X no Relations the available any page time-sensitive information following be recording weeks the

and revenue, and statements performance, investments XXXX and targeted milestones, meaning future anticipated dates future would and of our impact including release reimbursement made our including results long-term limited Securities Litigation of Before or I like TAM, we total or These statements remind Reform Act of today launch of you events operational begin, and similar and achieve drive expectations statements referenced our issued financial growth growth products and regarding not other our forward-looking for today, that ability are items financial and XXXX. include, contain containing but our outlook, the the the some our will earnings forward-looking to, initiatives, in our the Private our to projections regarding to within about stockholder statements statements value.

Form ended uncertainties factors risks materially number these will XX-K current that A contained of contemplated and differ for in detail on year can company's assurances filed other and there quarter forward-looking Forward-looking those and statements. report realized. in in case on to statements expectations September Factors These results company's obligation and its could under and with Commission. circumstances involve Exchange and These or each the these risks uncertainties, filed forward-looking we Form and Risk statements these change. cause be December described statements be the statements only the XX-Q documents and factors and Report in actual are of based the or speak inherent the Annual for today, XXXX, upon assume results quarterly reports revise and to the risks no as to heading in other are as XX, XX, no be ended Securities XXXX, in update forward-looking from and

have financial today items and information page GAAP non-GAAP such of revenue In margin, assessing has addition, non-GAAP accounting call the provide as which to issued calculated directly useful most or for States, measures Investor in performance. operating the the principles at and of to not release non-GAAP includes accordance tables generally on Reconciliations with a of as are supplemental turn adjusted Relations these believe in comparable We results. the website. I earlier EBITDA and some metrics financial posted now in information the of not the that measures, used in These gross addition substitute the to discussed GAAP. been revenue, any adjusted adjusted be United in should measures presented earnings been the today, these Derek. our our will end company's financial GAAP over accepted

Derek Maetzold

report the over revenue Castle total everyone. delivered test Biosciences volume you, that XX% by third by Thank quarter XXXX. of pleased share and good strong Camilla, afternoon, XX% and to growing another I'm quarter,

drive has financial of the business be model winning team. We by the spirit Our leverage strength our innovative cash performance. excellent earnings, frigid and the our the our performance to tests continued continues operating to flow achieved and positive that supported entire highlighting of in

continue our allowing for long-term shareholder Additionally, value. growth capacity, the in to invest we sheet to to have substantial and business drive balance efforts

our XX% in million confidence XX%. growth to and XXXX of results raising year-to-date range $XXX of year-over-year This our between revenue and to we business $XXX reflecting full outstanding million. are million to increase $XXX $XXX guidance million, momentum, reported guidance our year change range our Given an previously from reflects

third execution Now, additional through we I will and before will strategy turn your you business. highlights walk then from dermatology and quarter, our with Starting to questions. the highlights financial Frank provide core

the achieved market From see For in considerable test And delivered we X% growth years. a looking penetration. quarter estimate normal ahead, believe seasonality. the coming increasing as patient has to continue X,XXX year-over-year we the increase, potential a perspective, penetration DecisionDx-Melanoma, market in DecisionDx-Melanoma third approximately reports XX% third reflecting despite we we opportunity, we quarter, that

Our including adoption, compelling peer-reviewed clinical XX of than supporting body of use test. the continued more evidence publications the reinforces

test DecisionDx-Melanoma separate X our that recall will time related clinicians assists to with post-diagnostic questions period. answers in You the but

patient node The which lymph node, surgical a metastasis. what the is, biologic biopsy is, going or genomic to risk the having the next sentinel of first in impacts a to of the or a or second low risk likely procedure, patient lymph high a a And is of SLNB. risk perform is or years perform positive not recurrence sentinel decision the or metastasis have X

SLNB third question the much Kriza et on yet quarter. focused of the of This the end, drives saw post-diagnostic second accuracy another independent for published treatment test this study The positivity. in al., study, DecisionDx-Melanoma To pathway. we predictive the by

X had recall with that may adequate we we with years ourselves research follow-up, ago, long-term several once of questions. an base challenged samples You

algorithm we in accuracy best our the The algorithm first the the was was, developed still XX genes. that XXXX of for evaluating question

understanding always pathological XXXX. SLNB results factors be use that did different for clinical these did and/or SLNB we great find pathologic because cut identify a of our iXX-GEP could of the test. To for ROR in mention incorporating a intentionally exact for would accuracy the for as The as believe we that biology second clinical background and the of of was, one uses established risk occur have same DecisionDx-Melanoma of these as termed this not itself, patient that this because in is regarding added were our node. pathologic positivity clinical would than XX have for additional and sentinel assessment discovery report algorithm improve so recurrence for if that we metastasis those that strived that to question we here receive, the improved could at Castle. sentinel lymph be the assumed we we node was the both initial factors. lymph they We factor clinical integration same each predicting as the this or algorithm, that a our needed remains within SLNB best This if approach algorithm I factors recurrence well by risk of points melanoma recurrence the did recurrence. But be clinical the the aid clinicians we that test each factors pathologic our factors genes, better of could than retained predicting understood we I iXX-GEP assuming of evaluated positivity and not for each for science-driven use. pathologic melanoma predicting instead both then performance these for the Rather the the the

] test who well may a a have safely positive less COLLEAGUE DecisionDx-Melanoma associated predicted likelihood provided yet improving clinical surgical patient our to and the that identify performance that In back healthcare a What of a for of personalized [ SLNB focused costs. The demonstrating have those for To data they procedures want toward just predicted Now contrast, consider than X% of more and results. evidence who as Kriza to value This with SLNB, was surgery. is greater rate had on low outcomes. study. test of iXX-GEP actual patient DecisionDx-Melanoma in helping the risk was These of management as can XX.X%, conclude, was patients the and Dr. our positivity their of actual forgo clinical this study publication may to melanoma reduce procedure, found precise to improving the are the an positivity than to unnecessary patients our significant can example a have statistically impact rate the another and with enabling that positivity risk one X%. the patients, difference. SLNB, a higher rate XX% which of selection SLNB highly results patients

our Moving test. to DecisionDx-SCC on

adjuvant benefit of with squamous of volume likely We test see the receive more clinically ability with the selection compared than or treatment, study ART-eligible DecisionDx-SCC report predicted the would of of to be test increase in period our an and the of Women's XX discernible supporting reports by SCC. colleagues, peer-reviewed as XXXX, Dr. decision-making study We well to strong the the of test. are quarter new continue the from ART, in adoption in test X,XXX were use carcinoma, XX% publications who therapy, related a and high-risk pleased drive same of momentum, Brigham patient third patients use as to guiding the reinforces the patients test benefit. patients test launch Emily delivered or cutaneous of to cell especially publication Helping majority no adjuvant The our to Ruiz in identify to recent of Hospital the further radiation radiation XXXX. since with the

benefit this identify therapy. likely of that from the or patients second to to this year ability the are is radiation more Importantly, DecisionDx-SCC who study published demonstrates less adjuvant

treated American Dr. radiation May. spread Society colleagues therapy, a that to did those indicate in Class XX% and Radiation that adjuvant XB highest which saw by risk The first who results, Aaron demonstrated both test disease not slowing adjuvant when metastatic the the for with was note Oncology's prestigious studies, study DecisionDx-SCC Comparing and Journal in with radiation therapy. was X published potential, it's important Red in compared and reduction to significantly progression receive the the patients

metastatic value patients patients I Class that with be studies deferring can those in majority difference ART, up treatment. between represent DecisionDx-SCC out unnecessary SCC who Class progression lowest with to the radiation test shows study ruling This and safely those found treated patients DecisionDx-SCC's who the consider counseled disease therapy the risk, which of underscoring make I remained in untreated. results, no For adjuvant

demonstrating the risk-aligned the in sixth care stratification. start of patient tumor XXXX, Finally, risk biology-based test value the of marks through improving results study this DecisionDx-SCC since precise

esophagus which turn is used individualized Now, TissueCypher assess of patients progression risk in our to cancer test, Barrett's the to esophageal diagnosed with disease. let's

factor of risk one is cancer, Barrett's for known less the the U.S. only the a X-year survival As esophagus than esophageal in a dismal of reminder, of fastest-growing with development cancers XX%. the rate

reports which growth by that a pleased in of third of to well XXX%. July how test representing XXXX, XXXX, received test more the been gastroenterology are September TissueCypher the In third with XXXX, accepting accepting TissueCypher TissueCypher resumed nonetheless we said community. XXXX period a XXXX, X,XXX compared you for quarter comparison XXXX. paused third extremely same year-over-year we phased remind new pleased year-over-year We approach in for of the and and report has with X,XXX delivered the a in I'd of year-to-date are reports in XXXX quarter made slightly temporarily orders results performance. our we volume orders beginning Having quarter that, favorable

of significant for plans we momentum, a through and modest of are continued With the believe for early growth. very earlier our stages recent penetration U.S. capacity expansion sufficient end to XXXX, in our team for the an continued billion future with TAM, market demand year, Pittsburgh estimated expansion momentum $X laboratory positioned of well in we runway commercial this meet

in XXXX, business. over financial reports of who to relating mental IDgenetix growth. I X,XXX to details is the with turn X,XXX Frank, Turning delivered in We the now results. our third quarter provide will call test quarter, which the XX% our health year-over-year will to compared

Frank Stokes

Good Derek. everyone. you, Thank afternoon,

quarter test effective was a ASPs DecisionDx-SCC DecisionDx-SCC Advanced in the growth dermatologic are The of excellent of so resulted to I'd of in full test was has to of quarter June third been predominantly quarter X designation driven Diagnostic we in compared XXXX. was This an report volume the of our into and over Laboratory highlighted, XXXX, the third integrated the nondermatologic now DecisionDx-SCC was remind $XX.X third increase XXXX. increase improvement or XXXX. you for excludes prior proud test XX% ADLT, delivered an which third by higher of financial of and our of effects increase in tests results XXXX. XX, our Derek the ASP for our starting test results ASP million, that impact adjustments the tests the third periods, As Revenue XX% in for quarter an quarter, for status increase over granted revenue, of current that XXXX. million for Test, period quarter to revenue quarters. Adjusted the in third related $XX.X the our

the the quarter which quarter with of prior of gross our the to excludes third the margin, related excludes our during adjustments margin XX.X% acquisitions asset period intangible XX.X% quarter in the in was was compared reports and And revenue the third associated Our XX.X% gross in amortization periods, effects XX.X% compared adjusted effects to for to in delivered XXXX. current period test of same for XXXX. the

expenses. to Turning

operating totaled in million headcount million attributable XXXX. million the expenses personnel same reflect to administrative for XXXX. $XX.X the expenses, expenses including costs. well transportation for our XXXX. as personnel slightly to third the costs and of and fees, personnel increase business quarter expenses Sales same is expense expansions in and stock-based the administrative of for average $X.X of expense, expense, of of period the were rates. $XX.X lower million for personnel of Increases expense, costs compensation sales, of headcount $XX.X third higher and professional higher marketable the third clinical to of million the in personnel technology-related the quarter due million, slightly while The costs for $XX third reflect the compared compared quarter the our same through in higher to quarter by third and which The quarter inflationary R&D relatively higher quarter support among in to development response quarter and higher report each Higher marketing to to XXXX. annual sales to million million and growing mainly additions supplies higher and XXXX, noncash and volumes, income costs, as million is XXXX allocated studies costs, higher support for for a million 'XX. Interest to $XX.X costs. third consistent. General $XX.X activities, third in made well primarily personnel due quarter, higher of existing wage services. period total $XX.X in well primarily as lab due of growth $XX.X of costs business wage and higher compared to test costs Our merit for million marketing higher for compared reflects and information $XX.X Higher were quarter employees. Cost in test in existing is increase $XX.X to for employees. million volumes. R&D for incurred primarily $XX.X expenses XXXX, report were adjustments compared functions, services interest SG&A travel to were Total 'XX XXXX in as as cost for were increased investment to expenses inflationary primarily The period balances the higher adjustments merit sales were expense in the lab also supplies XXXX as increase cost slightly third securities and reflects annual compared due XXXX of and

Medicare test. coverage third by continued expense, we tax driven the our $X For for income of quarter million had XXXX, primarily a DecisionDx-SCC

provision pretax the all based coverage, estimated year. on we the loss XXXX to in tax of due our income previously a for unpredictability for Specifically,

able However, resulting position an a with updated tax to we information, reforecast XXXX. income, quarter in of for expense of income were generating third the to net

also We expense expect the quarter incur a in of to fourth tax XXXX.

$X.XX XX, Diluted earnings diluted for income The third months with in the in to offset net for per million disciplined of to months XXXX debt, of continued EBITDA from of of stock cash, the and of $XX.X for was was the line of quarter stock stock XX, to by to was million net was taxes improvement vesting of X restricted the quarter XXXX XXXX. issuance third $X.X period of $XX September the from $X.X and financing provided compared proceeds employee cash loss in to was significant an expense ended a $XX.X cash of per near believe for provided plan, loss $X.X XXXX. of for quarter and for in $X.X compared partially balance for of payment marketable XXXX, million. quarter purchase September consisted continue Our Net $XX.X the million to of $X.X strong activities our attributable from for the long third Adjusted cash XXXX, primarily operating long-term strong grow our million exercise proceeds by contributions along the top million the third X the employee improvement business the the equivalents, options, primarily activities share of $XX.X year-over-year by compared XXXX. growth, and million reflects management. Net with of $XX.X our quarter third to a $X.XX securities units. We third proceeds million million, financial the share million of term. $X.X million quarter million ended strength XXXX comparable ended quarter provides and We million. $XXX.X the sheet

revenue look As proud out XXXX, conclusion, to our long-term call near- both We back fourth Derek expect third raising value. I'll quarter Derek. $XXX the a drive million, the million now strong $XXX set to our to $XXX forward year-to-date stage shareholder turn in mentioned, to momentum to million from very and close the to we which of financial and up XXXX $XXX quarter I'm to are million. In performance. guidance continued will XXXX we

Derek Maetzold

In summary, this is time a Frank. Thank for exciting Castle you, very Biosciences.

execute Our continued success. Thank for results the third a the team at year-to-date your high for long-term strong positioning Castle. you level, continues growth quarter and company and with in of delivering to goal interest

be your Operator? questions. take We happy to will now

Operator

have lines Mikson question We Canaccord. with from Kyle the phone the Instructions] on [Operator first

Kyle Mikson

for from how would understand Novitas. it DecisionDx-SCC XQ processed test, revenue? as there's portion can in revenue the stepdown can the was XQ, as if just helpful about guess share lab how And of that potentially else talk down from on from noncoverage be anything much I based on by claims came by Palmetto derm that the impact of you stepped well you to

Frank Stokes

Kyle, volumes? are you talking sequential about

Kyle Mikson

from Yes, XQ. from XQ

Frank Stokes

Yes.

when quarter. COVID there trends And shows what sequential you MD&A, in in documents, that you predictable volumes. is So every put look we terms quarter of in very every we chart to our a year, have volume quarter except see our year,

we're to growth sequential there. days we basis that a patient just on based give be you of And sure not you said at good and I'm as office year-over-year -- of the see second you look encounters, QX and that, so biggest the looking physician about And things again? believe you at when number were seeing having reduced me through SCC SCC tends the year. it's uptake. But on -- volumes? course, asking about that can Something question chart,

Kyle Mikson

noncoverage during earlier happened the if have P&L, XQ? in saw just Frank, Palmetto that Yes. quarter, evident XQ. confirm some in we on that numbers Maybe on the the the by just that from based impact seen happened could if that and based that's in

Frank Stokes

from No, on we didn't that see impact Palmetto the policy. the No. business

Kyle Mikson

few disease give this before just and and so? a primer the path next And over then Derek, that you of market data landscape or that what that can the terms readout like inflammatory months opportunity relates of the timing some competitive And validation on next to it here? us pipeline, to year test, for as the expect we in the should like the maybe in test

Derek Maetzold

Yes.

discover to update to reconfirm what and our public back providing We test does we able we earlier committed like, established a go might first were a milestones. launch. on when test, to that me look let So our progress,

conversation year. Kyle, we go end have of ahead still to and the the that, between track and on a now So public about are

So track. that on remains

That guided sometime still the of In terms intact. had previously prior end of to launch, remains XXXX. we

milestones. on So both those I for we're think track

switching. broader the here, broader systemic of the atopic initiating there, I'll an In ongoing first prospective approach terms multicenter But who patients question biologic your opportunity of the just our take here. therapy large enrolls are as protocol or dermatitis part are or example

step a enough in take therapies would that for -- make as dermatitis potential you well moderate just have go atopic focus a atopic to I works use, to a symptoms patient ahead used topicals to [Technical identify decided, over clinician want as that your would step what and discuss spectrum I'm systemics, So a oral becomes, the that getting be of that's having psoriasis. lower a over use severe question either higher in you ongoing have the if want the from the in one threshold therapy so error, we're of injectables. And patient So and of here being specific just sometime patient predominantly going systemic and analysis, severe when of to normally as fourth to where and they towards to it's the trial they very, our very do a it therapies, disease? of to case likelihood can terms both other response solid it's derm, do the population you Difficulty] test end versus do outcome Or driving likelihood? quarter, for that you well have obviously. or this we'll on But really, first actually as

Operator

Your Nam with from Sung comes next Ji Scotiabank. question

Corey Rosenbaum

This is for on Sung Ji. Rosenbaum Corey

you the did awareness any Presidential biggest you conference. was to getting level Poster love at ACG the Conference interest the get receive? moment? What from And So related a TissueCypher of pushback, TissueCypher. physicians you're at feedback the for the at Would pushback what's the sense to there or recent if a Award won

Derek Maetzold

part I Corey's middle Camilla, the missed question. of

Camilla Zuckero

what is was reception or the it, saying, want was repeat He you TissueCypher? unless, saying, And he what you're getting receiving the any from pushback pushback, time? around getting at just Corey, this are you you're physicians if feedback to

Derek Maetzold

from specifically attendance at Around the TissueCypher conference? just

Camilla Zuckero

that Yes, we the then at Yes, was just an segue. the conference, an TissueCypher. There won was that off and poster was at the award conference. he award-winning basing

Derek Maetzold

poster. ACG's

Okay.

I -- much I of terms our So resistance comment in commercial on I team. pushback guess. from hear can't resistance, so don't one,

read for very, physician what, in phases our we very patients, that think and the I awareness. marketing or tests enough stages, appropriate the obviously on in this appreciate their of of Still guess, months we still We are through have it are are despite clinicians still I but introductory think early now on. so. having XX been using they early who literature I have

I is the to quite So think resistance low test. adopting

I more flow. And I then left the to incorporate that, think, disease. with realize impacts and tests into changes was the that direct I try awareness that in Barrett's so patients care lot workflow, fact esophagus almost think or is grading, think all our table of due on pathology it's our a it the to patient beginning largely risk-aligned gastroenterologists to and there

We also know, or Barrett's the to eradicate is essentially tool average gastroenterologist knows, that most Barrett's if I I radiofrequency recommend form that common stop ablation from the esophageal Medtronic's lesion, eradication therapy, cancer. really the progressing can lesion to using

we who disease. has Barrett's everybody esophagus However, can't ablate

patients, are alone, or it or go grading up of those to active surveillance, enough that alone progressing for if progressing you patients, rely those you I X XXX,XXX, that majority still on years just patients So that being or pathology being go XXX,XXX think, X seen can just every from you ends the X and save or a would diagnoses early ahead esophageal X where endoscopy, years catch cancer. them hoping under repeat

know works. and these with that a system, non-dysplastic therapy Barrett's RFA esophagus to also and eradication So can't, all we they patients know treated get as afford that They disease.

I'm stop ruling group of thought terms progression. cancer how frequently actors to are same that more a in I that's TissueCypher if in test them, intervention talking I use in say, appropriate the frequent. essentially they test endoscopies test can have And about to so reendoscopic to for patients. there patient I large opposed probably my is If about then also patients hey, with a I find current test time, they use I biopsy really our as I come and can non-dysplastic hopefully the and repeat bad And At do. align get back because interventions. being well, guidelines will our comfortable more say, And low-risk with the too intervene being of them know result, pretty relaxing just to

essentially see higher with deescalating fact "cured." have is confined test. well, of which putting things esophagus patterns, you the that can of But both largely the having And and other then, does awareness likelihood And it would just lack who patients into progressing or or our of that a because care. limitations. we what of to those is way, our lesion resistance course data So Barrett's of them of do think finding ignorance course, I ablated there's

So the early they And should job is still of that adjust the about it's low the the to educating predominantly they say they resistance for is And our really I care, would test, awareness patient would or to why customers use agree their consider. if test awareness. keep our important order patients.

Corey Rosenbaum

if Great. that that Really recently on guidance? be was you appreciate may in any the impact Can few in there were impact could and there QX. insight. a And QX elaborate obviously, hurricanes, an on impact have reflected on QX how any

Derek Maetzold

Helene September, was was the of think October, latter and event. I then quarter let's what, of more Milton a that right So in part came, now, so see, fourth

our predominantly With between I'm and about the seeing time a dermatologist, dermatology talking here. lead a patient business

seeing a our or a days, melanoma to patient is pathology, a it biopsy, not, a get for you week goes few PA after or it between a time test a this mole an lead doctor, the NP for dermatologist possible or is takes With a or that. ordered diagnosis,

of don't saw upper that North the impact know a third So full-time Florida not a pathway period because the lack some that resources of there are and practicing of of we of went we Carolina. the customers, do in certainly in as still still through time. up if have hurricane there one, that I panhandle of who though, meaningful I in know Florida for Milton quarter the utilities. And clinicians know knocked we part out and

a volumes missing we'd the So practices have necessarily X quarter, I the some days quarter. you exact only fourth and of are overbooked be week or because those pretty would anyways assumption impact would can't few in terms a dermatology that practice, that to of expect into same in fit all

not we're say we volumes that quarter. time, XXXX, by the to for way some seen haven't quite in point So this I the their in volume frank, any except At impact we on may to see would there, so assumptions fourth guidance being through, work updated some expect impacted an those that perhaps hurricanes. our and here's estimate fourth quarter includes around putting here be

Operator

Lake Thomas have now We Street. Flaten with

Thomas Flaten

this, in if are apologize the how you assuming much but missed I contribution SCC Frank, guide? I

Frank Stokes

are it almost through We at point. that quarter the have whole Thomas, assuming, we'll this

Thomas Flaten

on previously, them? any fully seen like pathway. team. on question with a takes are from you just X, reps. just productive, become where it positive said And the what, then And TissueCypher X they I you've X I impact months that about larger to probably know the but months you've curious had, know Have

Frank Stokes

think that we're... I

Derek Maetzold

We would the...

Frank Stokes

Sorry We like we're seeing. about that. what

I way to. we tracking them expect they're think that would the

contribution year, we'll So very how get hopefully online. next they're and as seeing pleased with be class full coming that but X into April we

Operator

now Mason We Carrico Stephens. with have

Mason Carrico

just the GI reps next to Just going you remind you XX the where more rep continuing over us maybe a team adding, say months? you on heard guys for I And today? that. moderate Could stands X then plan How think the do many I count expansion on forward.

Derek Maetzold

Yes.

we over recall. this XX-ish our So quarter, of continue May -- in this time. of XXXX. if nailed the territory period, into the haven't you I added April, we territories, number we at number quite have exact in expanded to And The that have we'll think, time point course down around

targetable do in that think should than we practice do around customers. groups in dermatologists larger be were general. think XX,XXX practicing I They they gastroenterologists

the based XX settings. the gastroenterologists right, probably number. impact think So to but in XX low XX individual upon in XXs practice up ability about don't ending is or XX,XXX feels data-driven We and that'll be right our their we targeting think those to

and the next in in locked would that to we to mid-XXs haven't would target, on right now. So be certainly, our go but in the like expect low- looks necessarily I go what us year

Mason Carrico

Okay.

if missed sorry by there? I path it's And Obviously, you this, the right for where DecisionDx-SCC, forward but guys still paid do now. stand Novitas

a lot guys test. been of value of You supporting that have evidence the publishing

had the with share reconsideration you you process discussions Any with pursuing So are color there? can Have them? you Palmetto?

Derek Maetzold

Not lot. a whole

We reimbursed do of so by process in review our or following years Pennsylvania. our to the So test out of cell Pittsburgh now. XXXX, squamous laboratory be continue carcinoma first Medicare X.X in quarter our so we positive

no So the per business se. bearing MolDX has really LCD

find summer, high actually benefit for ever is said, final as impact nonclinical the on that what studies to you of respond, eligible [ there be to of recent in don't probably Aaron therapy. And hold won't also of the of ever a should effectiveness articles studies And eligible et in minority could who's with this that our ART Most squamous ART to same articles, of only but to reduction X predicted they that out compared perfect, cell receive posted hey, still if a we've are that who being robust benefit. the say, and those course, focusing following those on time, our Now metastasis, ] To between because number utility patients fall get of appropriate, came earlier be need a was a going of of received radiation seminal guess, more the et not the a not al., the and eyes. of of metastasis no XXX and the a therapy. people included. that at that X response. Both that tremendous adjuvant evaluating to a get be able ART saw patients did studies than who showing the will one recur test, we clear I benefit, which have it they largest risk who will patients benefit, one, represented them, of on is pushed the incidence you've therapy, towards noted for differences happen going who were skin, published second-largest got and a high patients later but al., to other likely the only able carcinoma XX% the receive none complications showed and were who have probably are can was who's being not reduced when Ruiz more majority who adjuvant were plus, importantly the LCD in that XXXX to

the but opportunity pathway, would the will used reimbursed therapy people the and say, we of So the and the only at impact couple create radiation adjuvant the of of also have to new you it to ago think what of the pathway that board save a wow, at is not and million look cost team, numbers, spent great in is that reimbursement there. here that cost Novitas was system. is Palmetto not less expect data a really reducing the in our who test, but team significant One year if of That a end day, year we the a take elsewhere dollars of I complications. And across current arm average a savings. showing there direct informed be received clinicians radiation this earlier upwards think cost or Medicare that just decisions, therapy, that better, patients more within Medicare years could the on to that real $XXX the that was study was might make Medicare published cost, median

Operator

Souda We Leerink Partners. now have Puneet with

Puneet Souda

couple. a Maybe

cutaneous guidelines. one I'm latest melanoma. and could how would for did Any the cutaneous there, melanoma? What's strategy? expectation if expectation? wrong, NCCN And First affect you update guidelines it include reimbursement your there your on elaborate me what's correct not And the

Derek Maetzold

XXXX, that They late I year, in the routinely XXXX. or in December or in in they of X -- not they last years pretty in case been they either of meeting did consistent guess. think Puneet, 'XX. February non-FDA-approved meet they've this, publish or So they publish updates I in-person early that July X post-COVID, pathways, therapy in early And I in in think the updating the published their where is consider usually January

be no something got something could be it's I've It do in might we reason month they cycle, to in January So because going a this out December, think print would a see to or trend. November. new that's

tests So inside of don't information they to might any update, of pathways. what treatment timing or that's part do include regarding as the that. modify, our have We

Puneet Souda

organizations noncoverage pharmacogenomics, companies then payer. from ] then in any paid? commercial space, think current about to where pressures had on you a your And diagnostic decision a there [ managed peer one is getting you IDgenetix have if diagnostics that little further from from were that? you most the a bit of talk impact the And Can if you're and indefensibility can reimbursement in the the do you there payers the care elaborate

Derek Maetzold

Frank?

Frank Stokes

know Sure. And that, a We're it's Puneet. Yes. under with We did small impact contract us. that payer. not for

payments I our consistent So would than less assume peer companies are are.

big a not impact right So now. us on

of unfortunate, of continuing evidence clinical same bit strategies board generate that a educate utility. family continuing it's and the payer. have cost drug relates the unfortunately. on pharmacogenomic managed show and it isn't to for tremendous being a borne done not across by to just And As It's we to The the cost really on has borne support right with the and here, clinical strategy tests reimbursement, the being their depression not an show utility. the the on effective by patient their Puneet, med and employer, somebody is test

And minimal just and us, that the and so impact as for keep actual makes to But we'll ambivalent companies very keep one can have suppose, following something outcome. insurance tracking. the then, to patient

Puneet Souda

do you on rates ADLT commercial wanted Where with you you any that commercial expect stand other are you where just And tests follow up the reimbursement that beyond pursuing that. for And melanoma? cutaneous have? effort? Do to

Frank Stokes

Yes.

all We to and with as Yes, our as presentation on well tests. that's and data are that's generation of effort, payer Certainly pursuing correct. commercial continue strategy. push of our interaction that, coverage part our

Operator

question have Knight line the Paul KeyBanc. next from with We our on

Paul Knight

XX%, should growth Question, we this plateauing up or now rate, where revenue. flat Are I percentage you Frank, revenue want XX% effort, SG&A of rollout, to say? SG&A be only COGS on with

Frank Stokes

be we've in think and to way get profitability. hard hard cash characterized to is, that. breakeven you The the we've grown think worked reality need P&L. our and to prudent the certain worked I to I Yes, We've scale do past, I've flow into a on expenses,

So that do have been companies. smaller we're able we've that other with pleased scale than to a many

to So P&L and those line, rate we'll would work grow the lower categories grow categories manage to continue at continue grow a to than to but revenue and top expense the that overall. expense carefully leverage

Paul Knight

a Frank? be going to you thing still that having grow, rate see R&D And the to with What's or grower? SG&A. SG&A double-digit-type Is Derek same

Frank Stokes

It's -- we We to would SG&A from R&D think it. in or although in There we're to growth like it's the really be? so I to to -- we A limiter common-sized available of is internally pure for S territories a and don't not to is simple there, see there. out there growth line size. with what And and fairly to our category, a S But a deploy just the And top continue that of of where efforts part But a sales some know, there, on and perspective. and just G&A depends comes derm are here There's view from think like things. We'd that room P&L, does where that's do XX% capacity as just certainly Paul. think add from lower force see really hurdles full. of important a as growth. that the attractive drive the territories have I seen double-digit close over able and to a we're side, part growth. mature territories R&D, in we getting that. personnel going XX% some much need have, deciding to right resources certainly terms it's part I SG&A on revenue that part going where take growth, as we've to being

Operator

We Securities. now with have Guggenheim Subbu Nambi

Ricki Levitus

Quest given This partnered is for that's of data like sell at new the presented light you landscape DecisionDx-Melanoma by with the they've Tempus and with Subbu in Guggenheim. what recently, Ricki now competitive for looks provide on to been Could on the test? SkylineDx some us especially color right

Derek Maetzold

excellent That's question. an

for to just the audience here. context So of provide rest the

commercial think, over we in expect Skyline healthy U.S. I care, competition, availability of what, been last haven't seen So that's And Frank, for maybe they meaningful. since, summer is XXXX, while about that talked has that's marketing always we test been we the I their the traction X years think, announced the patient have when

hear We field partnered you license much As had and Tempus that. some a that. that I there the don't was information Quest an for in year guess about earlier mentioned, had announcement this with they

because node, if means you the used Now, hey, having less a years, about you'll lymph talked lymph then that number X% other you than and find of I say, likelihood test positivity the decades melanoma designed lymph a That more than was positive, a less of guidelines be have their achieve probably important say, sentinel that X% rate, threshold in which for that chance, NCCN a X% even interesting. have sentinel X if avoid X plus, node cell you you was study to prove or of study procedure. a should is to recent is could node which want to sentinel

a than And you in XX% if it and range. have then is you that X% discuss XX%, consider doing risk, consider it. recommend you If we to have more that

presented, very, X% Their group was than in less public was came over little that is in is the a low-risk bit very point. at a X.X%. the which study So skipped their important cut press,

X% the threshold. above certainly So well

from so that's perspective, our And unexpected. not

at were melanomas in test question if was consistently based TX, point range, who looked we time, X% publication the we in melanomas, X% that which you that their that. that XX% I published that able evaluated the a said right that about are low demonstrated that data call Skyline for test, the late both study upon that published think TX risk fact, whereas in to of test, at In was what there identify our was test would threshold, DecisionDx-Melanoma was and and below majority to patients our XXXX data

So staging came in at they of AJCC offer presented this ago to anything And a to that couple here you're didn't was that alluding study than upon more X.X%. weeks paper. that appear based

So not from very patient perspective. favorable a care necessarily

the see studies show forward, below in test and a if what means alternative are we'll X.X% chance which to comfortable provides DecisionDx-Melanoma versus threshold. positivity Castle guess that of an terms I have using that to wait node clinicians test, that In X% low-risk of patients going are

Operator

now We with Catherine Schultz have Baird.

Thomas Peterson

for business few calls Tom is maybe the I update Independent the on for between But last a I if policy private high I Catherine. payer thinking a medical in investment week, of question the on this Apologies the afternoon. at earlier one and just part in jumping about in I something was level pace me of from call. year this guess, Peterson of the This guess repeat XXXX? IDgenetix. into how IDgenetix latter are you

Derek Maetzold

Frank?

Frank Stokes

we Yes, continue how very that. terms we Appreciate in measured to there. will there. be Thanks, of invest

different the you're ASPs aware, our rest than there of are As portfolio. the

there. And we the so we'll be pedal very cautious hard hit about how

noted test, a had it it's earlier any benefit very I valuing and an you like important noted needs aren't rate, have of -- from the sounds insurance commercial might It's As earlier, at as sorry, the patient important to category. such. But test. I call. jump the It's another that as important an companies,

And landscape. so difficult the very reimbursement on

thoughtful, we'll we'll we So and forward effort and we be for measured, make the be we'll sure there. put on investment the that sales return get appropriate

Thomas Peterson

one just quick maybe follow-up there. And

overall XXXX about in previously some positive a basis? cash profitability us, you to just the just net flow can full you be from net Or are cash year XXXX expecting point? flow be quarterly thinking positive activities we in on issued should at For remind XXXX operating guidance,

Frank Stokes

there adjusted adjustment said basis. is we'll operating flow the year basis expense. We've and primary stock-based compensation XXXX, a year for positive noncash on Full full cash be

Operator

We BTIG. now with have Mark Massaro

Vidyun Bais

Mark. on keep This it Vidyun actually. for is I'll just to one,

or how paid of they're confirm review? clock. the the from have to on Novitas, that And we the and of on I general of interim. in SCC of hearing just just any back just to sort wanted Whether them, be your in So hearing you'll know in front to I the from Do get undetermined XXXX? continue color absence half them on you half SCC it's an on should timing sense share prioritizing

Derek Maetzold

can I here. fill on up that one

test covered that the first, necessity they indicated a did first and XXXX, which in I met test the claim April submitted think is question reasonable that today. a maybe Medicare's was in through in ] important us the and a first have review which we of most that that and guidelines, continues since this complete been Novitas [ XXXX, quarter So was to

reviewed given only which has So stronger appropriate covered we the then. test, is a which are evidence gotten and since that was

of feedback, test that, an the ahead to end part data unfortunate, in or that we a on timing there, SCC which would think can't projecting maintain this we to year, terms we next early thought of payment say of we update don't year. lot guidance next not of any assumption and an through there really terms rely of of right? is updates us, update except for But direct did good course, opportunity the of thoughts, on any In for all I year, so that late go have is reflect whole we to our

Operator

like Officer, and would Founder, I Chief back hand remarks. the some Executive to it to Derek, President, now for final

Derek Maetzold

quarter third again Thank interest earnings us our continued concludes your today and joining call. in for you Biosciences. This Castle XXXX for

Operator

Castle disconnect can the call Biosciences rest call. Call. now Quarter your I confirm joining XXXX today's of for now all concluded. from the Please Conference you has Third enjoy the day, may and Thank you

Castle Biosciences (CSTL) 4 Nov 242024 Q3 Earnings call transcript