Financial Analysis

Commitments and Contingencies From time to time, we may be involved in legal proceedings arising in the ordinary course of business. On February 1, 2024, we received a subpoena from the U.S. Department of Health and Human Services, Office of Inspector General, seeking documents and information concerning claims submitted for payment under federal healthcare programs. The subpoena requested that we produce documents relating primarily to interactions with medical providers and billing to government-funded healthcare programs for our tests. The time period covered by the subpoena is January 1, 2015 through the date of issuance of the subpoena. We are continuing to cooperate with the governments request and are in the process of responding to the subpoena. We are unable to predict what action, if any, might be taken in the future by the Department of Health and Human Services, Office of Inspector General, or any other governmental authority as a result of the matters related to this subpoena. No claims have been made against us at this time. Any potential claims could subject us to significant liability for damages and harm our reputation. Our insurance and indemnities may not cover all claims that may be asserted against us. We are unable to predict the outcome and are unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome. …

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Long-Term Debt Our long-term debt is presented in the table below (in thousands): June 30, 2026 December 31, 2025 Term debt $ 10,200 $ 10,200 Unamortized discount (125) (143) Total debt, net 10,075 10,057 Less: Current portion of long-term debt (2,917) (417) Total long-term debt $ 7,158 $ 9,640 Future maturities of principal amounts on long-term debt as of June 30, 2026 were as follows (in thousands): Years Ending December 31, 2026 $ 417 2027 5,000 2028 4,583 Total $ 10,000 2024 Loan and Security Agreement On March 26, 2024 (the Closing Date), we entered into a Loan and Security Agreement, as amended in April 2025 (the 2024 LSA), by and between us, our wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the Lender). The 2024 LSA provides for (i) a term loan in the principal amount of $10.0 million, which was drawn on the Closing Date (the 2024 Term Loan), and (ii) a $25.0 million line of credit which expired undrawn on September 30, 2025. The obligations under the 2024 LSA are secured by substantially all of our assets, excluding intellectual property, the real property held by us, and are subject to certain other exceptions and limitations. We have the right to prepay the 2024 LSA in whole. Amounts repaid may not be reborrowed. The 2024 LSA contains customary conditions of borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, …

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The table below provides the disaggregation of revenue by type (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Dermatologic (1) $ 48,704 $ 56,297 $ 89,809 $ 119,259 Non-Dermatologic (2) 54,842 29,891 97,416 54,917 Total net revenues $ 103,546 $ 86,188 $ 187,225 $ 174,176 (1) Consists of DecisionDx-Melanoma, DecisionDx-SCC and MyPath Melanoma. (2) Consists of TissueCypher, DecisionDx-UM and IDgenetix.

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Stock Incentive Plans and Stock-Based Compensation Equity Incentive Plan On July 24, 2019, we adopted the 2019 Equity Incentive Plan (the 2019 Plan). 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. Under this provision, effective January 1, 2026, an additional 1,484,315 shares became available under the 2019 Plan. As of June 30, 2026, 1,443,825 shares remained available for grant under the 2019 Plan. Inducement Plan On December 22, 2022, our board of directors approved the 2022 Inducement Plan (the Inducement Plan). The Inducement Plan provides for the granting of awards as inducement material to the grantees 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 June 30, 2026, there were 574,512 shares available for grant under the amended Inducement Plan. Stock Options Stock option activity under our stock plans for the six months ended June 30, 2026 is set forth below: Weighted-Average Stock Options Outstanding Exercise Price Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2025 2,784,432 $ 36.53 Granted $ Exercised (61,484) $ 6.79 Forfeited/Cancelled (38,245) $ 46.61 Balance as of June 30, 2026 2,684,703 $ 37.06 4.1 $ 8, …

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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. For equity securities traded on foreign exchanges, fair values are determined based on quoted market prices in the applicable foreign markets and are remeasured into U.S. dollars using exchange rates in effect at each balance sheet date in accordance with ASC Topic 830, Foreign Cu …

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Goodwill and Other Intangible Assets, Net Goodwill We had a single reportable segment consisting of a single operating segment where the operating segment and the single reporting unit were the same as of June 30, 2026 and December 31, 2025, where all goodwill was allocated. As of June 30, 2026 and December 31, 2025, our goodwill was $10.7 million. There were no accumulated impairments of goodwill as of June 30, 2026 or December 31, 2025. See Note 15 for additional information on our reportable segment. Other Intangible Assets, Net Our other intangible assets, net consisted of the following (in thousands): June 30, 2026 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 118,500 $ (34,143) $ 84,357 9.8 Assembled workforce 563 (516) 47 0.4 Total other intangible assets, net $ 119,063 $ (34,659) $ 84,404 December 31, 2025 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 153,500 $ (64,721) $ 88,779 10.3 Assembled workforce 563 (460) 103 0.9 Total other intangible assets, net $ 154,063 $ (65,181) $ 88,882 Amortization expense of intangible assets was $2.3 million and $4.5 million for the three and six months ended June 30, 2026, respectively, and $2.0 million and $30.3 million for the three and six months ended June 30, 2025, respectively.

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Income Taxes Our effective tax rate was (21.9)% and (3.0)% for the three and six months ended June 30, 2026. The effective rate for the three and six months ended June 30, 2026 differed from our federal statutory rate of 21% primarily due to the tax impact from the valuation allowance for current year activity, state income taxes and the non-deductibility of other permanent items. During the three and six months ended June 30, 2025, we recognized income tax benefit of $4.7 million and $5.1 million, respectively, primarily from the reduction of the valuation allowance on deferred tax assets, recorded as a discrete benefit in the quarter ended June 30, 2025. This release was primarily driven by the acquisition of Previse, which resulted in deferred tax liabilities related to acquired intangible assets. The effective rate for the three and six months ended June 30, 2025 differed from our federal statutory rate of 21% primarily due to the tax impact from the valuation allowance for the period activity including the acquisition of Previse, state income taxes and the non-deductibility of other permanent items.

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Leases Unit 1 Pittsburgh Lease On March 19, 2026, we entered into a lease agreement with Faros ACA RE, LLC for approximately 21,000 square feet of additional office and laboratory space in Pittsburgh, Pennsylvania within a building we already partially occupy (the Unit 1 Pittsburgh Lease). The lease has an initial term of approximately 11 years and will commence upon completion of landlord-provided leasehold improvements. The lease includes tenant improvement allowances and provides for an extension option and a one-time early termination option, each subject to certain conditions. As of June 30, 2026, the lessor had not made the underlying asset available for use, and accordingly, we have not recognized a right-of-use asset or lease liability in our condensed consolidated balance sheet. …

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Recently Adopted Accounting Pronouncements In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments Credit Losses (Topic 326): Practical Expedient for Certain Current Receivables (ASU 2025-05), which provides a practical expedient for estimating expected credit losses on current accounts receivable and contract assets arising from transactions under ASC 606. The practical expedient allows entities to assume that current conditions remain unchanged over the remaining life of the receivables. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, including interim periods within those annual periods. We adopted the standard effective January 1, 2026, with no impact on our consolidated financial statements. Accounting Pronouncements Yet to be Adopted In November 2024, the FASB issued ASU No. 2024-03, Income StatementReporting Comprehensive Income (Subtopic 220-40)Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses (ASU 2024-03), which specifies additional disclosure requirements. The amendments in ASU 2024-03 require disclosure about the composition of certain income expense line items, such as purchases of inventory, employee compensation, and other expenses, as well as disclosure about selling expenses. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact this update will h …

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Revenue All of our revenues from contracts with customers are associated with the provision of testing services. Our revenues are primarily attributable to our TissueCypher test for patients diagnosed with Barretts esophagus and our DecisionDx-Melanoma test for cutaneous melanoma. We also provide our DecisionDx-UM test for uveal melanoma, MyPath Melanoma test for patients with melanocytic lesions and our DecisionDx-SCC test for cutaneous squamous cell carcinoma. IDgenetix, a pharmacogenomics testing service focused on mental health, was previously offered and discontinued in May 2025. 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 ma …

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Segment and Related Information We derive revenues through the delivery of test reports for our molecular diagnostic tests. All of our operations are located within the U.S. and our business is focused on the U.S. market. We have a single reportable segment consisting of a single operating segment. The measures of segment profit or loss for our single reportable segment were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net revenues from external customers (1) $ 103,546 $ 86,188 $ 187,225 $ 174,176 Significant segment expenses : Personnel costs 60,349 51,551 118,716 103,751 Organizational and marketing costs 16,029 14,487 31,623 28,716 Inventory usage 8,450 5,458 14,887 10,189 Clinical studies and publication costs 2,103 1,923 4,645 4,008 Professional services 2,669 2,298 5,676 5,874 Other segment items 16,006 5,948 28,260 42,963 Segment (loss) income $ (2,060) $ 4,523 $ (16,582) $ (21,325) (1) For information on disaggregation of segment revenue by type and information about payor concentration, see Note 3. Other Segment Items Other segment items include all other operating expenses types, including IT service and software licensing costs, fixed and variable expenses incurred for leasing of facilities and equipment, depreciation and amortization, gain or losses on disposal of fixed assets in the routine course of business, fair value adjustment for equity securities, realized gains or losses on investment securities, adm …

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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. We have a history of recurring net losses and negative cash flows and as of June 30, 2026, we had an accumulated deficit of $240.9 million. We believe our $62.1 million of cash and cash equivalents and $204.7 million of marketable investment securities as of June 30, 2026, 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. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of June 30, 2026; the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive (loss) income and the condensed consolidated statements of stockholders equity, each for the three and six months ended June 30, 2026 and 2025; and the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and 2025 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the sa …

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