Castle Biosciences (CSTL) Q4 2021 earnings summary

Executive summary

• FY21 revenue rose 50.2% to $94.1M; test reports reached 28,118, up 55% YoY, while net loss widened to $31.3M.

• Growth reflected higher dermatology test volume and reimbursement, expanded commercial capacity, and acquisitions adding myPath Melanoma and TissueCypher to the portfolio.

• Priorities are the core dermatology franchise, pipeline development and strategic opportunities; management expects cash and product proceeds to fund operations into the foreseeable future.

Financial highlights

• Net revenue was $94.085M in FY21 versus $62.649M in FY20; dermatology contributed $85.753M and other tests $8.332M.

• Operating loss was $40.079M versus $6.542M; net loss was $31.292M versus $10.284M, including an $8.720M income tax benefit in FY21.

• R&D expense rose 123.6% to $29.646M and SG&A rose 80.2% to $86.738M, driven principally by headcount, clinical studies and commercial expansion.

• Cash and cash equivalents were $329.6M at year-end, down from $409.9M; operating cash use was $19.0M and investing cash use was $66.7M.

Outlook and guidance

• Management expects continued growth based on core dermatology, pipeline initiatives and strategic opportunities, with cash and expected product sales sufficient for operations for the next 12 months and into the foreseeable future.

• The inflammatory skin test, targeting systemic-therapy response in psoriasis, atopic dermatitis and related conditions, is expected to launch by end-2025; the 4,800-patient study has 50 committed centers.

• Up to three to five additional tests could launch by end-2025, potentially adding ~$1.7B to U.S. addressable market; near-term gross margin is expected to decline with capacity investment and acquired-intangible amortization.

• 2022 Medicare rates: DecisionDx-Melanoma $7,193, DecisionDx-UM $7,776, myPath Melanoma $1,950 and TissueCypher $2,513; potential SCC and DiffDx draft coverage decisions were expected in 2022.