Q2 2023 revenue increased 44% over Q2 2022 to
$50 million
Q2 2023 total test reports increased 52% over
Q2 2022
Raising full year 2023 revenue guidance to at
least $180 million from $170-180 million
Conference call and webcast today at 4:30 p.m.
ET
Castle Biosciences, Inc. (Nasdaq: CSTL), a company improving
health through innovative tests that guide patient care, today
announced its financial results for the second quarter and six
months ended June 30, 2023.
“Castle delivered an outstanding second quarter, with strength
across our entire test portfolio,” said Derek Maetzold, president
and chief executive officer of Castle Biosciences. “Building on our
first quarter momentum and driven by consistent execution across
the entire Castle team, we delivered strong test report volume and
revenue growth. Based on strong first half 2023 execution and
confidence in our business, we are raising our 2023 revenue
guidance to at least $180 million.
“In addition, we expanded our body of evidence, further
demonstrating the clinical value of our innovative tests and
supporting adoption by clinicians and payers. Specifically, two
patient outcome studies on our DecisionDx®-Melanoma test were
published in the second quarter. The first study was from our
collaboration with the National Cancer Institute’s SEER Program
Registries. Data from this study showed that testing with
DecisionDx-Melanoma was associated with lower melanoma-specific and
overall mortality relative to untested patients. A similar study
was published by Dhillon, et al. This independent, multi-center
study found that sentinel lymph node negative patients whose
follow-up treatment pathway was directed by the DecisionDx-Melanoma
test for use of routine imaging in patients with high-risk
DecisionDx-Melanoma results led to earlier detection of
recurrences, when the tumor burden was lower. At study end, 76% of
patients in the tested group who had a melanoma recurrence were
alive compared to 50% in the untested group.
“Additionally, during open comment periods, we had the
opportunity to present data to a number of Medicare contractors
related to one of the treatments that our DecisionDx®-SCC test has
been shown to inform, adjuvant radiation therapy (ART). These data
from a matched control analysis compare patients with high-risk
squamous cell carcinoma (SCC) with one or more risk factors who
received ART and those who did not. When evaluating this cohort, we
observed that the DecisionDx-SCC Class 2B result could identify a
group of patients with a significant reduction in metastasis rate
after having received ART and that the DecisionDx-SCC Class 1
patients did not receive a benefit from ART.
“Our continued success is a testament to the ongoing dedication
of our team to our patient-centric mission. With a track record of
delivering on our short- and long-term strategies, combined with a
healthy balance sheet and multi-year plan to deliver revenue growth
and positive net operating cash flow by year-ending 2025, we are
managing the business with a goal of driving near- and long-term
shareholder value.”
Second Quarter Ended June 30, 2023, Financial and Operational
Highlights
- Revenues were $50.1 million, a 44% increase compared to $34.8
million during the same period in 2022. Included in revenue for the
period were revenue adjustments related to tests delivered in prior
periods. These prior period revenue adjustments for the quarter
ended June 30, 2023, were $0.1 million of net negative revenue
adjustments, compared to $0.6 million of net positive revenue
adjustments for the same period in 2022.
- Adjusted revenues, which exclude the effects of revenue
adjustments related to tests delivered in prior periods, were $50.2
million, a 47% increase compared to $34.3 million for the same
period in 2022.
- Delivered 16,820 total test reports in the second quarter of
2023, an increase of 52% compared to 11,034 in the same period of
2022:
- DecisionDx-Melanoma test reports delivered in the quarter were
8,597, compared to 7,125 in the second quarter of 2022, an increase
of 21%.
- DecisionDx-SCC test reports delivered in the quarter were
2,681, compared to 1,344 in the second quarter of 2022, an increase
of 99%.
- MyPath® Melanoma test reports delivered in the quarter were
953, compared to 955 MyPath Melanoma and DiffDx®-Melanoma aggregate
test reports in the second quarter of 2022.
- DecisionDx®-UM test reports delivered in the quarter were 461,
compared to 431 in the second quarter of 2022, an increase of
7%.
- TissueCypher® Barrett’s Esophagus test reports delivered in the
quarter were 1,447, compared to 352 in the second quarter of 2022,
an increase of 311%.
- IDgenetix® test reports delivered in the quarter were 2,681,
compared to 827 in the second quarter of 2022, an increase of
224%.
- Gross margin for the quarter ended June 30, 2023, was 73%, and
adjusted gross margin was 78%.
- Net cash used in operations was $3.8 million, compared to $9.0
million for the same period in 2022.
- Net loss for the second quarter, which includes non-cash
stock-based compensation expense of $12.8 million, was $(18.8)
million, compared to $(1.6) million for the same period in
2022.
- Adjusted EBITDA for the second quarter was $(5.3) million,
compared to $(11.2) million for the same period in 2022.
Six Months Ended June 30, 2023, Selected Results
- Revenues were $92.2 million, a 49% increase compared to $61.7
million during the same period in 2022. Included in revenue for the
period were revenue adjustments related to tests delivered in prior
periods. These prior period revenue adjustments for the six months
ended June 30, 2023, were $1.7 million of net negative revenue
adjustments, compared to $0.3 million of net negative revenue
adjustments for the same period in 2022.
- Adjusted revenues, which exclude the effects of revenue
adjustments related to tests delivered in prior periods, were $93.9
million, a 51% increase compared to $62.0 million for the same
period in 2022.
- Delivered 31,736 total test reports in the six months ended
June 30, 2023, an increase of 61% compared to 19,661 in the same
period of 2022:
- DecisionDx-Melanoma test reports delivered in the six months
ended June 30, 2023, were 16,180, compared to 13,148 for the same
period in 2022, an increase of 23%.
- DecisionDx-SCC test reports delivered in the six months ended
June 30, 2023, were 5,092, compared to 2,486 for the same period in
2022, an increase of 105%.
- MyPath Melanoma and DiffDx-Melanoma test reports delivered in
the six months ended June 30, 2023, were 1,933, compared to 1,905
MyPath Melanoma and DiffDx-Melanoma aggregate test reports for the
same period in 2022, an increase of 1%.
- DecisionDx-UM test reports delivered in the six months ended
June 30, 2023, were 870, compared to 887 for the same period in
2022, a decrease of 2%.
- TissueCypher Barrett’s Esophagus test reports delivered in the
six months ended June 30, 2023, were 2,830, compared to 408 for the
same period in 2022, following our initial offering of the test
beginning in December 2021.
- IDgenetix test reports delivered in the six months ended June
30, 2023, were 4,831, compared to 827 for the same period in 2022,
following our initial offering of the test beginning in April
2022.
- Gross margin for the six months ended June 30, 2023, was 72%,
and adjusted gross margin was 77%.
- Net cash used in operations was $29.2 million, compared to
$30.4 million for the same period in 2022.
- Net loss for the six months ended June 30, 2023, which includes
non-cash stock-based compensation expense of $26.4 million, was
$(48.0) million, compared to $(26.3) million for the same period in
2022.
- Adjusted EBITDA for the six months ended June 30, 2023, was
$(20.4) million, compared to $(22.6) million for the same period in
2022.
Cash, Cash Equivalents and Marketable Investment
Securities
As of June 30, 2023, the Company’s cash, cash equivalents and
marketable investment securities totaled $225.5 million.
2023 Outlook
Castle Biosciences is increasing its guidance for anticipated
total revenue in 2023. The Company now anticipates generating at
least $180 million in total revenue in 2023 compared to the
previously provided guidance of $170-180 million.
Second Quarter and Recent Accomplishments and
Highlights
Dermatology
- DecisionDx-Melanoma: In June, the Company announced the initial
publication of its collaboration with the National Cancer
Institute’s SEER Program Registries. This large study of
real-world, unselected patients confirmed prior prospective and
retrospective studies showing DecisionDx-Melanoma provided
clinically meaningful and significant, independent risk
stratification of patients with cutaneous melanoma (CM), beyond
American Joint Committee on Cancer Eighth Edition (AJCC8) stage.
Additionally, the study showed that testing with
DecisionDx-Melanoma was associated with lower melanoma-specific and
overall mortality relative to untested patients. The publication
can be found here.
- DecisionDx-Melanoma: In May, the Company announced an
independent, multi-center study providing a direct chain of
evidence that use of DecisionDx-Melanoma test results to guide
radiological surveillance could lead to improved patient outcomes.
Specifically, this study directly compared the impact of management
changes in sentinel lymph node negative patients whose follow-up
pathway was directed by the DecisionDx-Melanoma test to patients in
the same institution who were not tested and, therefore, did not
have their follow-up pathway changed from the institution’s
traditional follow-up pathway. The results showed that metastasis
was detected earlier, when the tumor burden was smaller, and at
study end, 76% of patients in the tested group who had a metastasis
were alive compared to 50% in the untested group. The study,
authored by Dhillon et al., can be found here.
- DecisionDx-SCC: In June, the Company announced new data
demonstrating the ability of the DecisionDx-SCC test to identify
cutaneous squamous cell carcinoma (cSCC) tumors at a biologically
high risk of metastasis in a subset of patients considered to be at
a low risk of metastasis by traditional staging. In the study, the
DecisionDx-SCC test was able to significantly stratify three-year
metastasis free survival rates within the AJCC8 and Brigham and
Women’s Hospital T1 populations of the cSCC cohort. See the
Company’s news release from June 12, 2023, for more
information.
- DecisionDx-SCC: In June, the Company announced the publication
of a paper highlighting a clinician-derived, real-world algorithm
that provides a framework to incorporate DecisionDx-SCC test
results into clinical practice within National Comprehensive Cancer
Network (NCCN) guideline recommendations. This framework for
stratifying patients with advanced cSCC includes a treatment
algorithm that demonstrates how use of DecisionDx-SCC test results
can assist clinicians in identifying personalized, risk-aligned
treatment pathway improvements for patients with high-risk cSCC,
based on the patient’s tumor biology, which may help improve their
disease outcome. The publication can be found here.
Gastroenterology
- In May, the Company announced that its three posters at the
recent Digestive Disease Week Annual Meeting were honored as
“Posters of Distinction” by the American Gastroenterological
Association Institute Council, ranking among the top 10% of the
more than 3,100 abstracts showcased during the meeting. See the
Company’s news release from May 26, 2023, for more
information.
- In May, the Company announced that it had been selected as the
winner of the “Best Use of Artificial Intelligence in Healthcare”
award in the seventh annual MedTech Breakthrough Awards program for
its innovative TissueCypher Barrett’s Esophagus (BE) test. The
TissueCypher test provides clinicians with important information
about a patient’s individual risk of progression to esophageal
cancer based on advanced analysis of biopsied tissue to guide more
informed and risk-aligned management of BE patients. See the
Company’s news release from May 15, 2023, for more
information.
Mental Health
- In June, ECRI, an independent, nonprofit organization improving
the safety, quality and cost-effectiveness of care across all
healthcare settings, concluded its genetic test assessment of
Castle’s IDgenetix test with a four out of five, or “Somewhat
Favorable,” rating. Commercial payers utilize ECRI evaluations to
assist in making coverage decisions.
- In May, the Company announced real-world study data
demonstrating that use of IDgenetix to guide medication management
can significantly improve medication response and remission rates
in patients diagnosed with moderate to severe depression, compared
to current standard-of-care treatment. The study abstract can be
found here.
Corporate
- In July, the Company announced that it had earned a second
consecutive Arizona Top Workplace award from AZ Central, the
digital home of The Arizona Republic newspaper. See the Company’s
news release from July 17, 2023, for more information.
- In May, the Company announced that it opened a new
state-of-the-art laboratory facility in Pittsburgh. The new
20,000-square-foot facility doubles the size of its previous
Pittsburgh laboratory and is expected to have the capacity and
ability to process each of its proprietary tests. Additionally, the
Company anticipates doubling its workforce in Pittsburgh, creating
approximately 35 new jobs by the end of 2023. See the Company’s
news release from May 22, 2023, for more information.
Conference Call and Webcast Details
Castle Biosciences will hold a conference call on Wednesday,
August 2, 2023, at 4:30 p.m. Eastern time to discuss its second
quarter 2023 results and provide a corporate update.
A live webcast of the conference call can be accessed here:
https://events.q4inc.com/attendee/543951973 or via the webcast link
on the Investor Relations page of the Company’s website,
https://ir.castlebiosciences.com/overview/default.aspx. Please
access the webcast at least 10 minutes before the conference call
start time. An archive of the webcast will be available on the
Company’s website until August 23, 2023.
To access the live conference call via phone, please dial 833
470 1428 from the United States, or +1 404 975 4839
internationally, at least 10 minutes prior to the start of the
call, using the conference ID 967509.
There will be a brief Question & Answer session following
management commentary.
Use of Non-GAAP Financial Measures (UNAUDITED)
In this release, we use the metrics of Adjusted Revenues,
Adjusted Gross Margin and Adjusted EBITDA, which are non-GAAP
financial measures and are not calculated in accordance with
generally accepted accounting principles in the United States
(GAAP). Adjusted Revenues and Adjusted Gross Margin reflect
adjustments to GAAP net revenues to exclude net positive and/or net
negative revenue adjustments recorded in the current period
associated with changes in estimated variable consideration related
to test reports delivered in previous periods. Adjusted Gross
Margin further excludes acquisition-related intangible asset
amortization. Adjusted EBITDA excludes from net loss interest
income, interest expense, income tax expense (benefit),
depreciation and amortization expense, stock-based compensation
expense, change in fair value of contingent consideration and
acquisition related transaction costs.
We use Adjusted Revenues, Adjusted Gross Margin and Adjusted
EBITDA internally because we believe these metrics provide useful
supplemental information in assessing our revenue and operating
performance reported in accordance with GAAP, respectively. We
believe that Adjusted Revenues, when used in conjunction with our
test report volume information, facilitates investors’ analysis of
our current-period revenue performance and average selling price
performance by excluding the effects of revenue adjustments related
to test reports delivered in prior periods, since these adjustments
may not be indicative of the current or future performance of our
business. We believe that providing Adjusted Revenues may also help
facilitate comparisons to our historical periods. Adjusted Gross
Margin is calculated using Adjusted Revenues and therefore excludes
the impact of revenue adjustments related to test reports delivered
in prior periods, which we believe is useful to investors as
described above. We further exclude acquisition-related intangible
asset amortization in the calculation of Adjusted Gross Margin. We
believe that excluding acquisition-related intangible asset
amortization may facilitate gross margin comparisons to historical
periods and may be useful in assessing current-period performance
without regard to the historical accounting valuations of
intangible assets, which are applicable only to tests we acquired
rather than internally developed. We believe Adjusted EBITDA may
enhance an evaluation of our operating performance because it
excludes the impact of prior decisions made about capital
investment, financing, investing and certain expenses we believe
are not indicative of our ongoing performance. However, these
non-GAAP financial measures may be different from non-GAAP
financial measures used by other companies, even when the same or
similarly titled terms are used to identify such measures, limiting
their usefulness for comparative purposes.
These non-GAAP financial measures are not meant to be considered
in isolation or used as substitutes for net revenues, gross margin,
or net loss reported in accordance with GAAP; should be considered
in conjunction with our financial information presented in
accordance with GAAP; have no standardized meaning prescribed by
GAAP; are unaudited; and are not prepared under any comprehensive
set of accounting rules or principles. In addition, from time to
time in the future, there may be other items that we may exclude
for purposes of these non-GAAP financial measures, and we may in
the future cease to exclude items that we have historically
excluded for purposes of these non-GAAP financial measures.
Likewise, we may determine to modify the nature of adjustments to
arrive at these non-GAAP financial measures. Because of the
non-standardized definitions of non-GAAP financial measures, the
non-GAAP financial measure as used by us in this press release and
the accompanying reconciliation tables have limits in their
usefulness to investors and may be calculated differently from, and
therefore may not be directly comparable to, similarly titled
measures used by other companies. Accordingly, investors should not
place undue reliance on non-GAAP financial measures.
Reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures are presented in the
tables at the end of this release.
About Castle Biosciences
Castle Biosciences (Nasdaq: CSTL) is a leading diagnostics
company improving health through innovative tests that guide
patient care. The Company aims to transform disease management by
keeping people first: patients, clinicians, employees and
investors.
Castle’s current portfolio consists of tests for skin cancers,
uveal melanoma, Barrett’s esophagus and mental health conditions.
Additionally, the Company has active research and development
programs for tests in other diseases with high clinical need,
including its test in development to predict systemic therapy
response in patients with moderate-to-severe psoriasis, atopic
dermatitis and related conditions. To learn more, please visit
www.CastleBiosciences.com and connect with us on LinkedIn,
Facebook, Twitter and Instagram.
DecisionDx-Melanoma, DecisionDx-CMSeq, DecisionDx-SCC, MyPath
Melanoma, DiffDx-Melanoma, DecisionDx-UM, DecisionDx-PRAME,
DecisionDx-UMSeq, TissueCypher and IDgenetix are trademarks of
Castle Biosciences, Inc.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which are subject to the “safe harbor” created by those
sections. These forward-looking statements include, but are not
limited to, statements concerning our expectations regarding: (i)
our full year 2023 revenue guidance of at least $180 million; (ii)
the potential of a DecisionDx-SCC Class 2B result to identify the
limited number of patients who received a significant reduction in
metastasis rate after having received ART as well as the
DecisionDx-SCC Class 1 patients who did not receive a benefit from
ART; (iii) the potential clinical value and utility of our tests,
including with respect to findings in the studies highlighted in
this press release; (iv) our multi-year plan to deliver revenue
growth and positive net operating cash flow by 2025 and our
management of the business with a goal of driving near- and
long-term shareholder value; (v) our belief that use of
DecisionDx-Melanoma test results to guide radiological surveillance
could lead to improved patient outcomes; (vi) the potential of
DecisionDx-SCC test results to assist clinicians in identifying
personalized, risk-aligned treatment pathway improvements for
patients with high-risk cSCC, based on the patient’s tumor biology,
which may help improve their disease outcome; and (vii) our
anticipated doubling of our workforce in Pittsburgh and our
expectation that our laboratory facility in Pittsburgh will have
the capacity and ability to process each of our proprietary tests.
The words “anticipate,” “can,” “could,” “expect,” “goal,” “may,”
“plan” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. We may not actually
achieve the plans, intentions, or expectations disclosed in our
forward-looking statements and you should not place undue reliance
on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements that we make. These
forward-looking statements involve risks and uncertainties that
could cause our actual results to differ materially from those in
the forward-looking statements, including, without limitation: the
accuracy of our assumptions and expectations underlying our fiscal
2023 revenue guidance (including, without limitation, our
assumptions or expectations regarding continued reimbursement for
our DecisionDx-SCC test at the current rate and reimbursement for
our other products and subsequent coverage decisions, our estimated
total addressable markets for our products and product candidates
and the related expenses, capital requirements and potential needs
for additional financing, the anticipated cost, timing and success
of our product candidates, and our plans to research, develop and
commercialize new tests and our ability to successfully integrate
new businesses, assets, products or technologies acquired through
acquisitions), the effects of macroeconomic events and conditions,
including inflation and monetary supply shifts, labor shortages,
liquidity concerns at, and failures of, banks and other financial
institutions or other disruptions in the banking system or
financing markets and recession risks, supply chain disruptions,
outbreaks of contagious diseases (such as the COVID-19 pandemic)
and geopolitical events (such as the ongoing Ukraine-Russia
conflict), among others, on our business and our efforts to address
its impact on our business; subsequent study or trial results and
findings may contradict earlier study or trial results and findings
or may not support the results discussed in this press release,
including with respect to the tests discussed in this press
release; our planned installation of additional equipment and
supporting technology infrastructures and implementation of certain
process efficiencies may not enable us to increase the future
scalability of our TissueCypher Test; actual application of our
tests may not provide the aforementioned benefits to patients; our
newer gastroenterology and mental health franchises may not
contribute to the achievement of our long-term financial targets as
anticipated; and the risks set forth under the heading “Risk
Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2022, our Quarterly Report on Form 10-Q for the three
months ended June 30, 2023 and in our other filings with the SEC.
The forward-looking statements are applicable only as of the date
on which they are made, and we do not assume any obligation to
update any forward-looking statements, except as may be required by
law.
CASTLE BIOSCIENCES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per
share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
NET REVENUES
$
50,138
$
34,838
$
92,175
$
61,690
OPERATING EXPENSES AND OTHER OPERATING
INCOME
Cost of sales (exclusive of amortization
of acquired intangible assets)
11,058
7,686
21,240
13,630
Research and development
13,308
11,926
27,701
22,687
Selling, general and administrative
44,681
37,498
91,443
67,951
Amortization of acquired intangible
assets
2,248
2,097
4,470
3,745
Change in fair value of contingent
consideration
—
(20,398
)
—
(17,836
)
Total operating expenses, net
71,295
38,809
144,854
90,177
Operating loss
(21,157
)
(3,971
)
(52,679
)
(28,487
)
Interest income
2,399
370
4,735
400
Interest expense
(3
)
(4
)
(7
)
(7
)
Loss before income taxes
(18,761
)
(3,605
)
(47,951
)
(28,094
)
Income tax expense (benefit)
16
(1,957
)
30
(1,823
)
Net loss
$
(18,777
)
$
(1,648
)
$
(47,981
)
$
(26,271
)
Loss per share, basic and diluted
$
(0.70
)
$
(0.06
)
$
(1.80
)
$
(1.02
)
Weighted-average shares outstanding, basic
and diluted
26,733
26,064
26,670
25,746
Stock-Based Compensation Expense
Stock-based compensation expense is included in the condensed
consolidated statements of operations as follows (in
thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Cost of sales (exclusive of amortization
of acquired intangible assets)
$
1,202
$
897
$
2,474
$
1,750
Research and development
2,486
1,831
5,073
3,659
Selling, general and administrative
9,161
6,055
18,827
11,793
Total stock-based compensation expense
$
12,849
$
8,783
$
26,374
$
17,202
CASTLE BIOSCIENCES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Net loss
$
(18,777
)
$
(1,648
)
$
(47,981
)
$
(26,271
)
Other comprehensive (loss)
income:
Net unrealized (loss) gain on marketable
investment securities
(8
)
—
237
—
Comprehensive loss
$
(18,785
)
$
(1,648
)
$
(47,744
)
$
(26,271
)
CASTLE BIOSCIENCES,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
June 30, 2023
December 31, 2022
ASSETS
(unaudited)
Current Assets
Cash and cash equivalents
$
95,874
$
122,948
Marketable investment securities
129,634
135,677
Accounts receivable, net
31,314
23,476
Inventory
6,121
3,980
Prepaid expenses and other current
assets
6,111
6,207
Total current assets
269,054
292,288
Long-term accounts receivable, net
1,227
1,087
Property and equipment, net
20,511
14,315
Operating lease assets
11,539
12,181
Goodwill and other intangible assets,
net
121,879
126,348
Other assets – long-term
1,190
1,110
Total assets
$
425,400
$
447,329
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current Liabilities
Accounts payable
$
7,135
$
4,731
Accrued compensation
17,298
24,358
Operating lease liabilities
1,966
1,777
Other accrued and current liabilities
7,318
5,262
Total current liabilities
33,717
36,128
Noncurrent operating lease liabilities
12,427
11,533
Deferred tax liability
441
428
Other liabilities
47
90
Total liabilities
46,632
48,179
Stockholders’ Equity
Common stock
27
27
Additional paid-in capital
587,771
560,409
Accumulated deficit
(208,886
)
(160,905
)
Accumulated other comprehensive loss
(144
)
(381
)
Total stockholders’ equity
378,768
399,150
Total liabilities and stockholders’
equity
$
425,400
$
447,329
CASTLE BIOSCIENCES,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended
June 30,
2023
2022
OPERATING ACTIVITIES
Net loss
$
(47,981
)
$
(26,271
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
5,932
4,779
Stock-based compensation expense
26,374
17,202
Change in fair value of contingent
consideration
—
(17,836
)
Deferred income taxes
13
(1,839
)
Accretion of discounts on marketable
investment securities
(2,282
)
—
Other
213
39
Change in operating assets and
liabilities:
Accounts receivable
(7,978
)
(5,628
)
Prepaid expenses and other current
assets
158
(707
)
Inventory
(2,141
)
(1,066
)
Operating lease assets
(469
)
437
Other assets
(80
)
504
Accounts payable
3,071
302
Operating lease liabilities
958
(445
)
Accrued compensation
(7,060
)
(1,013
)
Other accrued and current liabilities
2,047
1,111
Net cash used in operating activities
(29,225
)
(30,431
)
INVESTING ACTIVITIES
Purchases of property and equipment
(7,373
)
(1,807
)
Asset acquisition, adjustment to purchase
price
—
547
Acquisition of business, net of cash and
cash equivalents acquired
—
(26,661
)
Proceeds from sale of property and
equipment
8
8
Purchases of marketable investment
securities
(86,438
)
—
Proceeds from maturities of marketable
investment securities
95,000
—
Net cash provided by (used in) investing
activities
1,197
(27,913
)
FINANCING ACTIVITIES
Proceeds from exercise of common stock
options
184
509
Payment of employees’ taxes on vested
restricted stock units
(848
)
(88
)
Proceeds from contributions to the
employee stock purchase plan
1,688
1,511
Repayment of principal portion of finance
lease liabilities
(70
)
(55
)
Net cash provided by financing
activities
954
1,877
NET CHANGE IN CASH AND CASH
EQUIVALENTS
(27,074
)
(56,467
)
Beginning of period
122,948
329,633
End of period
$
95,874
$
273,166
CASTLE BIOSCIENCES, INC.
Reconciliation of Non-GAAP Financial
Measures (UNAUDITED)
The table below presents the reconciliation of adjusted revenues
and adjusted gross margin, which are non-GAAP financial measures.
See "Use of Non-GAAP Financial Measures (UNAUDITED)" above for
further information regarding the Company's use of non-GAAP
financial measures.
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(in thousands)
Adjusted
revenues
Net revenues (GAAP)
$
50,138
$
34,838
$
92,175
$
61,690
Revenue associated with test reports
delivered in prior periods
88
(578
)
1,705
300
Adjusted revenues (Non-GAAP)
$
50,226
$
34,260
$
93,880
$
61,990
Adjusted gross
margin
Gross margin (GAAP)1
$
36,832
$
25,055
$
66,465
$
44,315
Amortization of acquired intangible
assets
2,248
2,097
4,470
3,745
Revenue associated with test reports
delivered in prior periods
88
(578
)
1,705
300
Adjusted gross margin (Non-GAAP)
$
39,168
$
26,574
$
72,640
$
48,360
Gross margin percentage (GAAP)2
73.5
%
71.9
%
72.1
%
71.8
%
Adjusted gross margin percentage
(Non-GAAP)3
78.0
%
77.6
%
77.4
%
78.0
%
_______________________
1.
Calculated as net revenues (GAAP) less the
sum of cost of sales (exclusive of amortization of acquired
intangible assets) and amortization of acquired intangible
assets.
2.
Calculated as gross margin (GAAP) divided
by net revenues (GAAP).
3.
Calculated as adjusted gross margin
(Non-GAAP) divided by adjusted revenues (Non-GAAP).
The table below presents the reconciliation of adjusted EBITDA,
which is a non-GAAP financial measure. See "Use of Non-GAAP
Financial Measures (UNAUDITED)" above for further information
regarding the Company's use of non-GAAP financial measures.
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
(in thousands)
Adjusted
EBITDA
Net loss
$
(18,777
)
$
(1,648
)
$
(47,981
)
$
(26,271
)
Interest income1
(2,399
)
(370
)
(4,735
)
(400
)
Interest expense
3
4
7
7
Income tax expense (benefit)
16
(1,957
)
30
(1,823
)
Depreciation and amortization expense
3,040
2,628
5,932
4,779
Stock-based compensation expense
12,849
8,783
26,374
17,202
Change in fair value of contingent
consideration
—
(20,398
)
—
(17,836
)
Acquisition related transaction costs
—
1,711
—
1,711
Adjusted EBITDA (Non-GAAP)
$
(5,268
)
$
(11,247
)
$
(20,373
)
$
(22,631
)
_______________________
1.
Beginning in the fourth quarter of 2022,
we began excluding interest income from the calculation of Adjusted
EBITDA. The prior-year period presented herein has been recast to
conform to the current period presentation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230802820733/en/
Investor Relations Contact: Camilla Zuckero
czuckero@castlebiosciences.com 281-906-3868
Media Contact: Allison Marshall
amarshall@castlebiosciences.com
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