Castle Biosciences (NASDAQ:CSTL) reported first-quarter 2026 revenue of $83.7 million, supported by continued growth in what management described as its “core revenue drivers,” DecisionDx-Melanoma and TissueCypher. Founder, President and CEO Derek Maetzold said test report volumes for the company’s core revenue drivers increased 36% year over year, and he added that excluding DecisionDx-SCC and IDgenetix revenue, first-quarter 2026 revenue growth was approximately 42% versus the first quarter of 2025.
On the back of the quarter’s performance, management raised its full-year 2026 revenue outlook to $345 million to $355 million, up from prior guidance of $340 million to $350 million.
DecisionDx-Melanoma volumes rise 16%; management reiterates full-year growth view
Despite the first-quarter performance, management reiterated expectations for “mid to high single-digit volume growth for the full year 2026.” In response to an analyst question about phasing, Maetzold said the first quarter benefited from an “easier comp” than the remainder of the year.
Maetzold also highlighted recent clinical evidence presented at the 2026 American Academy of Dermatology annual meeting. He said new data from 1,868 SEER-linked patients showed the DecisionDx-Melanoma test “significantly stratifies five-year melanoma-specific survival within AJCC stages and T categories,” helping identify patients whose mortality risk is “substantially higher or lower than staging alone would predict.”
Maetzold referenced additional evidence from a prospective multicenter study evaluating DecisionDx-Melanoma’s i31-SLNB result, stating the study again confirmed the test identifies patients with a “less than 5% predicted risk” consistent with NCCN guideline thresholds while “outperforming traditional staging criteria.”
During Q&A, Maetzold discussed clinician feedback related to NCCN guidelines and other publications. He said Castle continues to hear that clinicians do not understand what NCCN “sees” in a study the company views as having “failed to meet the 5% cut point,” adding that customers have suggested the situation appears “more political” than expected. He also pointed to a “Future Oncology” publication as reinforcement that Castle’s test “comfortably” gets below 5% predicted risk in patients who underwent sentinel lymph node biopsy and said outcomes were “extremely strong” among patients who used the test to move away from SLNB.
Separately, Maetzold said the company is “moving forward” with an FDA submission on the timeline it previously described, “sometime in 2026.”
TissueCypher reports jump 58% year over year; seasonality cited for sequential dip
In gastroenterology, Castle delivered 11,745 TissueCypher test reports during the first quarter, up from 7,432 a year earlier, representing 58% growth, according to Maetzold. He said March was also an all-time record month for TissueCypher.
Two studies presented at Digestive Disease Week by Mayo Clinic researchers were highlighted as well. Maetzold said the findings showed molecular risk stratification with TissueCypher refined risk assessment and “directly informed real-world management decisions” for Barrett’s esophagus patients. He added that one study showed surveillance interval changes in “more than half” of patients compared with histopathology-guided recommendations.
Asked about a modest quarter-over-quarter decline in TissueCypher volume, CFO Frank Stokes attributed it to seasonality, saying the company has reached a penetration level where it is “seeing seasonality and feeling the sense of that.” Citing IQVIA third-party data, Stokes said the first quarter tends to have fewer GI procedures than other quarters. However, he noted March was a record month and said the trend “continued in April.”
Looking ahead, management reiterated expectations to add a similar number of TissueCypher test reports in 2026 as in 2025, which Stokes said would imply “something close to a 50% year-over-year growth for the year.” Maetzold later told an analyst that “most” of the quarter’s revenue beat versus expectations was driven by TissueCypher.
AdvanceAD-Tx: limited access, early demand, and reimbursement timing
Maetzold described AdvanceAD-Tx, a test designed to guide systemic treatment selection for patients 12 and older with moderate to severe atopic dermatitis, as a midterm revenue driver for 2027 and 2028 alongside the company’s core drivers. He said the test was released under a limited access program in mid-fourth quarter 2025 and received approximately 650 orders during the first quarter of 2026.
According to Maetzold, initial feedback indicates clinicians appreciate that the test integrates into existing atopic dermatitis care pathways, helping inform systemic therapy choices early in the treatment journey. He also pointed to a prospective multicenter clinical validation study published in the Journal of the American Academy of Dermatology, stating it showed AdvanceAD-Tx can identify patients more likely to achieve “greater and faster responses” with a JAK inhibitor compared with a Th2 biologic therapy.
On reimbursement, Maetzold said Castle expects to be able to provide “more detail on reimbursement by the end of the third quarter of 2026,” citing long revenue cycle timelines. In Q&A, he added that by the end of the third quarter the company expects to provide “good evidence-based clarity” on what it can assume for 2027 and 2028 “under a traditional reimbursement approach.” He also noted potential alternative avenues, including interest from parties focused on reducing costs associated with cycling through medications and “an opportunity to potentially partner with some of these pharmaceutical companies.”
When asked about expanding the initial rollout beyond targeted accounts, Maetzold said the company opened access “a bit more” late in the first quarter and plans to monitor early volume and reimbursement cycle assumptions before continuing a broader release. He described the 650 first-quarter orders as “very, very nice reinforcement” given that the field force remains focused on melanoma and access to the customer base is still limited. He also characterized AdvanceAD-Tx as a “pretty efficient” PCR-based test and said he would not expect it to have a material impact on the company’s blended adjusted cost structure “in the next several quarters.”
Margins and expenses: gross margin rebounds; operating expense mix shifts
Stokes reported gross margin of 72.8% for the first quarter of 2026, compared with 49.2% a year ago. He noted the first quarter of 2025 gross margin reflected a one-time adjustment related to accelerated amortization expense of approximately $20.1 million. Adjusted gross margin was 75.6% for the quarter, compared with 81.2% for the same period last year.
Total operating expenses, including cost of sales, were $102.1 million, down from $115.9 million in the first quarter of 2025. Stokes outlined several expense drivers:
- Sales and marketing expense rose to $41.0 million from $36.8 million, which Stokes attributed primarily to higher personnel costs and higher sales-related travel expenses tied to increased field activity.
- General and administrative expense increased to $23.9 million from $21.8 million, driven by higher personnel, IT-related costs, and travel, partially offset by lower professional fees.
- Cost of sales increased to $20.5 million from $16.4 million, reflecting higher lab supplies, lab services, personnel costs, and depreciation due to volume growth and laboratory expansion investments.
- R&D expense rose to $14.4 million from $12.6 million, driven by higher personnel and clinical studies costs.
Net loss narrowed to $14.5 million from $25.8 million in the prior-year quarter, and diluted loss per share was $0.49 compared with $0.90. Adjusted EBITDA was negative $5.1 million versus positive $13.0 million a year ago; Stokes said the year-over-year change “primarily reflects” a one-time, non-cash amortization expense recognized in 2025 related to accelerated amortization of the IDgenetix test.
Cash position, facility expansion, and M&A posture
Stokes reported net cash used in operating activities of $22.1 million for the quarter, which he said was due in part to annual cash bonus payments and certain healthcare benefit payments that do not recur in the remaining quarters. Net cash used in investing activities was $25.8 million, driven primarily by purchases of marketable securities of $55.1 million and purchases of property and equipment, partially offset by maturities of marketable securities and the sale of equity securities.
As of March 31, 2026, Castle had cash and cash equivalents and marketable securities of $261.7 million.
On capacity, Maetzold addressed a question about relocating to a new Phoenix laboratory facility. He said the company has not made the change yet, and the move is intended to keep capacity “a couple of years ahead of demand,” particularly for expanding dermatology volumes. He said he does not expect “much impact” on gross margins from the shift.
Stokes also said the company expects M&A to play a role in its growth story and will continue evaluating candidates that fit its strategic criteria, though he emphasized Castle does not feel compelled to pursue deals. “We don’t feel compelled to chase anything,” he said, adding that the company believes it has a “great opportunity with what we own and control today.”
On commercial staffing, Maetzold said the company believes it can cover its dermatology and GI verticals “with fewer than 100 reps,” and that is where it stands currently.
About Castle Biosciences (NASDAQ:CSTL)
Castle Biosciences, Inc is a molecular diagnostics company specializing in the development and commercialization of prognostic and diagnostic tests for patients with dermatologic conditions. The company’s proprietary portfolio of genomic assays is designed to improve risk assessment and guide clinical decision-making for individuals with skin cancers and other skin-related diseases. By combining genomic data with advanced statistical algorithms, Castle Biosciences seeks to provide actionable insights that help physicians tailor treatment plans and monitoring strategies.
The company’s flagship test, DecisionDx-Melanoma, evaluates the probability of metastasis in patients diagnosed with cutaneous melanoma, supporting more personalized surveillance and therapeutic approaches.
