Revenue growth accelerated to 20.1% YoY in Q2 2026, reaching $103.5M, but gross margin contracted to 77.1% from 83.3% in Q2 2024, while SG&A expenses rose 13.8% YoY, keeping operating margin negative at -3.0%.
Castle Biosciences, Inc. (CSTL) annual income statement — 9-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 |
|---|
| Sales/Revenue | 357.28M | 344.23M | 332.07M | 219.79M | 137.04M | 94.08M | 62.65M | 51.87M | 22.79M | 13.75M |
| Revenue Growth % | 3.18% | 3.66% | 51.09% | 60.38% | 45.65% | 50.18% | 20.79% | 127.62% | 65.67% | - |
| Cost of Goods Sold | 81.25M | 71.03M | 60.2M | 44.98M | 32.01M | 15.82M | 9.69M | 7.31M | 5.3M | 4.92M |
| COGS % of Revenue | - | 20.63% | 18.13% | 20.47% | 23.36% | 16.82% | 15.46% | 14.09% | 23.25% | 35.79% |
| Gross Profit | 276.03M | 273.2M | 271.86M | 174.81M | 105.03M | 78.26M | 52.96M | 44.55M | 17.49M | 8.83M |
| Gross Margin % | 77.26% | 79.37% | 81.87% | 79.53% | 76.64% | 83.18% | 84.54% | 85.91% | 76.75% | 64.21% |
| Gross Profit Growth % | - | 0.49% | 55.52% | 66.43% | 34.2% | 47.77% | 18.87% | 154.76% | 98.02% | - |
| Operating Expenses | 308.13M | 316.01M | 263.19M | 242.78M | 177.88M | 118.34M | 59.51M | 37.23M | 21.32M | 19.73M |
| OpEx % of Revenue | - | 91.8% | 79.26% | 110.46% | 129.81% | 125.78% | 94.98% | 71.78% | 93.59% | 143.46% |
| Selling, General & Admin | 243.66M | 229.32M | 200.05M | 180.15M | 143M | 86.74M | 48.13M | 29.84M | 16.47M | 15.26M |
| SG&A % of Revenue | - | 66.62% | 60.24% | 81.97% | 104.35% | 92.19% | 76.83% | 57.54% | 72.28% | 110.94% |
| Research & Development | 55.45M | 51.85M | 52.04M | 53.62M | 44.9M | 29.65M | 13.26M | 7.38M | 4.85M | 4.47M |
| R&D % of Revenue | - | 15.06% | 15.67% | 24.4% | 32.77% | 31.51% | 21.16% | 14.24% | 21.3% | 32.52% |
| Other Operating Expenses | 4M | 34.84M | 11.11M | 9.01M | -10.02M | 1.96M | -1.88M | 0 | 0 | 163.29K |
| Operating Income | -32.11M | -42.81M | 8.67M | -67.98M | -72.86M | -40.08M | -6.54M | 7.33M | -3.84M | -10.9M |
| Operating Margin % | -8.99% | -12.44% | 2.61% | -30.93% | -53.16% | -42.6% | -10.44% | 14.13% | -16.83% | -79.25% |
| Operating Income Growth % | - | -593.77% | 112.75% | 6.7% | -81.78% | -512.64% | -189.27% | 291.05% | 64.81% | - |
| EBITDA | -14.7M | -2.04M | 24.67M | -55.65M | -62.31M | -36.67M | -6.07M | 7.69M | -3.51M | -10.59M |
| EBITDA Margin % | -4.11% | -0.59% | 7.43% | -25.32% | -45.47% | -38.98% | -9.69% | 14.82% | -15.42% | -76.99% |
| EBITDA Growth % | -175.63% | -108.27% | 144.33% | 10.7% | -69.92% | -504.15% | -178.97% | 318.81% | 66.83% | - |
| D&A (Non-Cash Add-back) | 17.41M | 40.77M | 16M | 12.33M | 10.54M | 3.41M | 472K | 358K | 323.02K | 310.82K |
| EBIT | -18.85M | -29.43M | 22.14M | -57.35M | -68.89M | -40.01M | -7.57M | 9.92M | -4.08M | -10.71M |
| Net Interest Income | 10.26M | 11.69M | 12.34M | 10.61M | 3.95M | 67K | -2.26M | -4.26M | -2.25M | -1.62M |
| Interest Income | 10.63M | 11.77M | 12.92M | 10.62M | 3.97M | 68K | 373K | 312K | 23.51K | 26.18K |
| Interest Expense | 375K | 86K | 577K | 11K | 17K | 1K | 2.63M | 4.57M | 2.27M | 1.65M |
| Other Income/Expense | 12.9M | 13.3M | 12.89M | 10.61M | 3.95M | 67K | -3.66M | -1.98M | -2.52M | -1.46M |
| Pretax Income | -19.2M | -29.51M | 21.56M | -57.37M | -68.9M | -40.01M | -10.2M | 5.35M | -6.36M | -12.36M |
| Pretax Margin % | -5.37% | -8.57% | 6.49% | -26.1% | -50.28% | -42.53% | -16.28% | 10.31% | -27.91% | -89.86% |
| Income Tax | 212K | -5.36M | 3.32M | 101K | -1.77M | -8.72M | 84K | 72K | 8.61K | 9.73K |
| Effective Tax Rate % | -1.1% | 18.15% | 15.39% | -0.18% | 2.56% | 21.79% | -0.82% | 1.35% | -0.14% | -0.08% |
| Net Income | -19.41M | -24.16M | 18.25M | -57.47M | -67.14M | -31.29M | -10.28M | 5.28M | -6.37M | -12.37M |
| Net Margin % | -5.43% | -7.02% | 5.49% | -26.15% | -48.99% | -33.26% | -16.42% | 10.17% | -27.94% | -89.93% |
| Net Income Growth % | -105.1% | -232.41% | 131.75% | 14.41% | -114.55% | -204.28% | -294.88% | 182.88% | 48.53% | - |
| Net Income (Continuing) | -19.41M | -24.16M | 18.25M | -57.47M | -67.14M | -31.29M | -10.28M | 5.28M | -6.37M | -12.37M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | -0.64 | -0.83 | 0.62 | -2.14 | -2.58 | -1.24 | -0.54 | -0.21 | -0.60 | -1.26 |
| EPS Growth % | -86.14% | -233.87% | 128.97% | 17.05% | -108.06% | -129.63% | -157.14% | 65% | 52.38% | - |
| EPS (Basic) | - | -0.83 | 0.66 | -2.14 | -2.58 | -1.24 | -0.54 | 0.35 | -0.60 | -1.26 |
| Diluted Shares Outstanding | 30.4M | 28.99M | 29.25M | 26.8M | 26.05M | 25.14M | 18.93M | 8.66M | 10.65M | 9.78M |
| Basic Shares Outstanding | 30.4M | 28.99M | 27.78M | 26.8M | 26.05M | 25.14M | 18.93M | 8.58M | 10.65M | 9.78M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying CSTL stock.
For fiscal year 2025, Castle Biosciences, Inc. (CSTL) reported total revenue of $344.2M. This represents a 2402.8% increase compared to $13.8M in 2017.
Castle Biosciences, Inc. (CSTL) reported a net loss of $24.2M for the fiscal year ending 2025.
Castle Biosciences, Inc. (CSTL) reported an operating income of $-42.8M, resulting in an operating profit margin of -12.4%. This margin reflects the operational efficiency of the business before interest and taxes.
Castle Biosciences, Inc. (CSTL) generated $273.2M in gross profit for the year, representing a gross profit margin of 79.4%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Medicare LCD uncertainty for SCC
Metrics are mathematically derived from official filings.
Revenue Rebound Masks Underlying Volatility
CSTL's Q2 2026 revenue surged 20.1% year-over-year to $103.5M, according to the latest quarterly report, marking a sharp acceleration from the prior quarter's 4.9% decline and suggesting renewed commercial momentum.
The sequential jump from $83.7M in Q1 2026 to $103.5M in Q2 2026 is the largest quarterly increase in the reported period, likely driven by seasonal strength in dermatology visits and possibly improved reimbursement capture. However, the year-over-year growth rate has been erratic, swinging from 73.6% in Q1 2024 to -4.9% in Q1 2026, indicating that the underlying trend is not yet stable. Investors should monitor whether this acceleration is sustainable or a one-time catch-up, especially given the ongoing Medicare coverage uncertainties for the SCC test.
Gross Margin Compression Signals Pricing Pressure
Gross margin has declined from 83.3% in Q2 2024 to 77.1% in Q2 2026, as reported in financial statements, suggesting a structural erosion of pricing power or a shift in test mix toward lower-margin products.
The 620 basis point decline in gross margin over eight quarters is notable for a diagnostics company with supposedly high barriers to entry. While part of the decline may be due to the integration of newer tests like TissueCypher and IDgenetix, which likely carry lower gross margins, it also raises questions about the sustainability of the core melanoma test's reimbursement rates. If this trend continues, it could offset the benefits of operating leverage, making it harder to reach profitability.
Operating Leverage Elusive as SG&A Outpaces Revenue
Despite a 20.1% revenue increase in Q2 2026, CSTL's operating loss narrowed to -$3.1M from -$18.4M in Q1 2026, but SG&A expenses rose 13.8% year-over-year, indicating that overhead remains a drag on profitability.
The improvement in operating margin from -22.0% to -3.0% sequentially is encouraging, but it is largely due to the revenue spike rather than cost containment. SG&A of $66.1M in Q2 2026 is the highest in the reported period, and as a percentage of revenue it remains elevated at 63.9%. This suggests that the company is still investing heavily in commercial expansion, particularly for its newer product lines, and that true operating leverage may not materialize until revenue scales significantly beyond current levels.
Earnings Quality Clouded by SBC and Tax Anomalies
Reported net income swung to a $2.1M loss in Q2 2026 despite a $4.5M profit in Q2 2025, with stock-based compensation of $11.6M representing a significant non-cash charge that masks underlying cash burn.
The company's EPS of -$0.07 in Q2 2026 was a positive surprise versus the -$0.38 estimate, but the quality of that beat is questionable given the large SBC expense. Additionally, the net income in Q2 2025 included a $4.5M gain that appears to be a one-time tax benefit, as evidenced by the net margin of 5.2% versus an operating margin of -4.9%. Adjusting for SBC and non-operating items, the underlying earnings power is weaker than reported, and investors should focus on cash flow metrics rather than GAAP net income.
R&D Discipline Contrasts with SG&A Escalation
R&D expenses have grown modestly from $13.8M in Q1 2024 to $14.5M in Q2 2026, a 5% increase, while SG&A has surged 36% over the same period, per company filings, highlighting a strategic shift toward commercial investment.
The relatively flat R&D spend suggests that the company is prioritizing sales force expansion and market development over new product innovation, which may be appropriate given the need to scale TissueCypher and IDgenetix. However, the rapid growth in SG&A without a commensurate increase in revenue in some quarters indicates that the company is spending heavily to drive adoption, and if that investment does not yield sustained volume growth, it could lead to margin compression. The cost structure remains heavily weighted toward fixed costs, making the business sensitive to volume fluctuations.
Q2 2026 Marks a Potential Turning Point
The Q2 2026 earnings beat, with EPS of -$0.07 versus -$0.38 consensus, as reported in the latest earnings release, represents a significant inflection point, suggesting that the company may be nearing a break-even trajectory.
The sequential improvement in operating margin from -22.0% to -3.0% is the most dramatic in the reported period, driven by a 23.7% revenue increase. This could indicate that the investments in the commercial infrastructure are finally paying off, and that the company is gaining traction with its newer tests. However, it is important to note that Q2 is typically a seasonally strong quarter for dermatology, and the company has not yet demonstrated the ability to sustain this level of performance. The raised full-year guidance adds credibility to the inflection, but investors should watch for confirmation in Q3 and Q4.
Reimbursement Risk Could Undermine Growth Story
The most significant threat to CSTL's income statement is the ongoing Medicare Local Coverage Determination review for DecisionDx-SCC, which, if negative, could eliminate a substantial revenue stream and reverse recent margin improvements.
Short-sellers would argue that the company's high gross margins are vulnerable to payer actions, and that the recent revenue acceleration is partly due to one-time factors such as prior-period adjustments. The negative operating margins, despite 79% gross margins, indicate that the business model is not yet self-sustaining, and any adverse coverage decision could force the company to cut costs or raise capital. Furthermore, the reliance on a single test for the majority of revenue makes the company highly sensitive to regulatory changes, and the market may be underestimating the probability of a negative LCD. Investors should closely monitor any updates from Medicare contractors, as a final decision could have a material impact on the stock.