Castle Biosciences (CSTL) การประชุมแถลงผลประกอบการไตรมาส 3 ปี 2026: ปรับเพิ่มคาดการณ์รายได้

คาสเซิล ไบโอไซเอนซ์ (Castle Biosciences) (NASDAQ: CSTL) รายงานรายได้ประจำไตรมาส 3/2026 ที่ 102.9 ล้านดอลลาร์ เพิ่มขึ้น 24% เมื่อเทียบเป็นรายปี หลังปริมาณการตรวจด้วย TissueCypher ปรับตัวขึ้นอย่างก้าวกระโดด ทั้งนี้ บริษัทได้ปรับเพิ่มคาดการณ์รายได้ตลอดทั้งปี และยังคงคาดว่าจะมี EBITDA ที่ปรับปรุงแล้วเป็นบวก

ประเด็นสำคัญ

• รายได้ในไตรมาส 3/2026 เพิ่มขึ้น 24% เมื่อเทียบเป็นรายปี แตะที่ 102.9 ล้านดอลลาร์ โดยมีแรงหนุนหลักมาจากการเติบโตของปริมาณการตรวจด้วย TissueCypher
• บริการ TissueCypher ส่งมอบรายงานผลการตรวจ 15,574 ฉบับ เพิ่มขึ้น 47% จากไตรมาส 3/2025 โดยฝ่ายบริหารประเมินว่าอัตราการเจาะตลาดอยู่ที่ประมาณ 15% ของหัตถการต่อปีที่มีสิทธิ์ตรวจตามเกณฑ์การคำนวณแบบ Run-rate
• คาสเซิลได้ปรับเพิ่มคาดการณ์รายได้ประจำปี 2026 สู่ระดับ 385-395 ล้านดอลลาร์ จากเดิม 365-375 ล้านดอลลาร์ โดยระบุถึงการเติบโตของ TissueCypher และราคาขายเฉลี่ย (ASP) ที่ปรับตัวดีขึ้นในระดับรองลงมา
• EBITDA ที่ปรับปรุงแล้วเพิ่มขึ้นแตะ 12.7 ล้านดอลลาร์ จาก 9.2 ล้านดอลลาร์ ขณะที่กิจกรรมดำเนินงานสร้างกระแสเงินสดสุทธิประจำไตรมาสได้ 19.7 ล้านดอลลาร์
• บริการ DecisionDx-Melanoma ส่งมอบรายงานผลการตรวจ 10,177 ฉบับ นับเป็นไตรมาสที่ 5 ติดต่อกันที่มียอดสูงกว่า 10,000 ฉบับ โดยฝ่ายบริหารคาดการณ์ว่าปริมาณการตรวจในปี 2026 จะเติบโตในระดับหลักเดียวช่วงกลาง
• คาสเซิลสิ้นสุดไตรมาสดังกล่าวด้วยเงินสด รายการเทียบเท่าเงินสด และหลักทรัพย์ในความต้องการของตลาดประมาณ 278 ล้านดอลลาร์

ผลการดำเนินงานทางการเงินที่สำคัญ

ผลการดำเนินงานทางธุรกิจและการปฏิบัติการ

TissueCypher

TissueCypher ยังคงเป็นปัจจัยขับเคลื่อนการเติบโตหลัก โดยคาสเซิลส่งมอบรายงานผลการตรวจ 15,574 ฉบับ คิดเป็นการเติบโต 47% เมื่อเทียบเป็นรายปี ทั้งนี้ บริษัทยังคงยืนยันคาดการณ์การเติบโตของปริมาณการตรวจด้วย TissueCypher ตลอดทั้งปี 2026 ที่ระดับ 50%-52%

ฝ่ายบริหารระบุว่าผลการดำเนินงานดังกล่าวมาจากอัตราการใช้งานที่สูงขึ้นของแพทย์รายเดิมเป็นหลัก ขณะที่แพทย์ผู้สั่งตรวจรายใหม่มีสัดส่วนรองลงมา บริษัทประเมินว่าอัตราการเจาะตลาดในปัจจุบันตามเกณฑ์ Run-rate อยู่ที่ประมาณ 15% ของหัตถการส่องกล้องเพื่อติดตามอาการของภาวะหลอดอาหารบาร์เรตต์ (Barrett’s esophagus) ที่มีสิทธิ์ตรวจ

นอกจากนี้ คาสเซิลยังเน้นย้ำถึงการศึกษาแบบจำลองการตัดสินใจในผู้ป่วย 699 ราย โดยในกลุ่มผู้ป่วยโรคหลอดอาหารบาร์เรตต์ที่ไม่มีภาวะเจริญผิดปกติ (nondysplastic Barrett’s disease) ซึ่งต่อมามีการดำเนินของโรค การตัดสินใจรักษาโดยมี TissueCypher เป็นแนวทางช่วยเพิ่มสัดส่วนตามแบบจำลองของผู้ป่วยที่ได้รับการดูแลอย่างเหมาะสมจาก 30.4% เป็น 56.9%

DecisionDx-Melanoma

DecisionDx-Melanoma ส่งมอบรายงานผลการตรวจ 10,177 ฉบับ นับเป็นไตรมาสที่ 5 ติดต่อกันที่มีจำนวนมากกว่า 10,000 ฉบับ ขณะที่ปริมาณการตรวจในช่วงเก้าเดือนแรกของปี 2026 เพิ่มขึ้น 5% จากช่วงเดียวกันของปี 2025

ฝ่ายบริหารระบุว่า มะเร็งผิวหนังเมลาโนมายังคงเป็นเป้าหมายหลักของทีมพาณิชย์ด้านโรคผิวหนัง โดยคาสเซิลได้ปรับมุมมองปี 2026 เป็นการเติบโตของปริมาณการตรวจในระดับหลักเดียวช่วงกลางเมื่อเทียบเป็นรายปี และระบุว่าไม่พบการเสื่อมถอยเชิงโครงสร้างหรือแรงกดดันด้านการแข่งขันที่ส่งผลกระทบต่อธุรกิจ

AdvanceAD-Tx และ DecisionDx-SCC

AdvanceAD-Tx ส่งมอบรายงานผล 1,109 ฉบับในระหว่างไตรมาส โดยคาสเซิลยังคงจำกัดการลงทุนเชิงพาณิชย์ในระหว่างประเมินราคาขายเฉลี่ย (ASP) ในขั้นสุดท้ายและผลการกำหนดราคาของ Medicare สำหรับการตรวจดังกล่าว

สำหรับ DecisionDx-SCC ฝ่ายบริหารระบุว่าปริมาณการตรวจยังคงมีนัยสำคัญทางคลินิกแม้จะได้รับการสนับสนุนทางการตลาดอย่างจำกัด ทั้งนี้ คาสเซิลไม่ได้รวมการฟื้นฟูสิทธิประโยชน์ความคุ้มครองของ Medicare สำหรับการตรวจนี้ไว้ในสมมติฐานรายได้ปี 2027 และปัจจุบันได้วางความเป็นไปได้ในการฟื้นตัวไว้ในแผนงานปี 2028

Esopredict

คาสเซิลใช้ Esopredict เป็นทางเลือกเมื่อตัวอย่างมีเนื้อเยื่อไม่เพียงพอสำหรับการตรวจ TissueCypher โดยฝ่ายบริหารระบุว่านี่เป็นธุรกิจที่มีขนาดค่อนข้างเล็ก ซึ่งทำหน้าที่ตามเป้าหมายในการเพิ่มจำนวนผู้ป่วยที่สามารถรับผลการตรวจทางคลินิกได้

คาดการณ์แนวโน้มจากฝ่ายบริหาร

ฝ่ายบริหารกล่าวว่า แนวโน้มรายได้ที่สูงขึ้นสะท้อนถึงการเติบโตอย่างต่อเนื่องของ TissueCypher และส่วนสนับสนุนในระดับที่น้อยกว่าจากการปรับตัวดีขึ้นของ ASP ทั้งนี้ ค่ากึ่งกลางของช่วงคาดการณ์เพิ่มขึ้น 20 ล้านดอลลาร์จากช่วงก่อนหน้า และเพิ่มขึ้น 45 ล้านดอลลาร์จากคาดการณ์ของบริษัทเมื่อเริ่มต้นปี 2026

อัตรากำไรขั้นต้นที่ปรับปรุงแล้วคาดว่าจะยังคงทรงตัวในภาพรวมตลอดช่วงที่เหลือของปี 2026 โดยมีแรงหนุนจากประสิทธิภาพของห้องปฏิบัติการและระดับการตรวจที่ไม่ได้รับการชำระเงินที่ทรงตัว ขณะที่ฝ่ายบริหารตั้งสมมติฐานในการวางแผนว่า ASP จะยังคงคงที่ แม้ว่าการได้รับความคุ้มครองเพิ่มเติมจากผู้จ่ายเงินอาจเป็นปัจจัยหนุนเชิงบวก (upside) ก็ตาม

ปัจจัยเสี่ยงและประเด็นที่ต้องติดตาม

• ไตรมาส 4 อาจชะลอตัวลงตามฤดูกาล เนื่องจากวันหยุดในเดือนธันวาคมอาจทำให้วันทำการของสถานพยาบาลลดลง
• ปริมาณการตรวจ TissueCypher รายไตรมาสอาจมีความไม่สม่ำเสมอ อันเนื่องมาจากผลกระทบด้านปฏิทินและการหยุดชะงักชั่วคราวในพื้นที่การขายหลังการปรับเปลี่ยนทีมขาย
• ปริมาณการตรวจที่สูงขึ้นจำเป็นต้องเพิ่มบุคลากรในห้องปฏิบัติการที่พิตต์สเบิร์กและสกอตส์เดล แม้ว่าฝ่ายบริหารจะคาดหวังถึงการเกิดประโยชน์จากการประหยัดต่อขนาด (operating leverage) และประสิทธิภาพที่เพิ่มขึ้นก็ตาม
• CMS ได้เสนอกำหนดราคาแบบ Gap-fill สำหรับ AdvanceAD-Tx แทนคำแนะนำการเทียบเคียงราคา (Crosswalk) ของคณะที่ปรึกษา ทั้งนี้ คาสเซิลได้ยื่นข้อมูลการเทียบเคียงราคาเพิ่มเติมแล้ว แต่ผลสรุปสุดท้ายยังคงมีความไม่แน่นอน
• คาสเซิลไม่ได้ตั้งสมมติฐานว่าสิทธิประโยชน์ความคุ้มครอง Medicare ของ DecisionDx-SCC จะกลับมาในปี 2027
• การได้รับความคุ้มครองจากผู้จ่ายเงินเชิงพาณิชย์และการปรับตัวดีขึ้นของ ASP สำหรับ TissueCypher นั้นยากที่จะคาดเดาในแง่ของช่วงเวลาและขนาด โดยฝ่ายบริหารได้ตั้งแบบจำลองให้ ASP ทรงตัวมากกว่าการคาดหวังการเพิ่มขึ้นเพิ่มเติม

ประเด็นสำคัญจากช่วงตอบคำถามนักวิเคราะห์

แนวโน้มรายได้และไตรมาส 4: ฝ่ายบริหารระบุว่า ความแข็งแกร่งในไตรมาส 4 ที่สะท้อนออกมานั้นมาจากธุรกิจหลักมากกว่าปัจจัยใหม่ ๆ นอกจากนี้ คาดการณ์ดังกล่าวยังคำนึงถึงการชะลอตัวตามฤดูกาลในช่วงวันหยุดตามปกติแล้ว

โอกาสการเติบโตของ TissueCypher: ฝ่ายบริหารประเมินว่าอัตราการเจาะตลาดอยู่ที่ประมาณ 15% ของหัตถการที่มีสิทธิ์ตรวจ ซึ่งบ่งชี้ว่ายังมีโอกาสในการนำไปใช้อีกมาก โดยการขยายทีมขายครั้งล่าสุดเกิดขึ้นในไตรมาส 2 และโดยทั่วไปจะต้องใช้เวลาประมาณ 5 ถึง 6 เดือนก่อนที่ตัวแทนขายใหม่จะมีประสิทธิภาพการทำงานเต็มที่

ความยั่งยืนของ ASP: คาสเซิลระบุว่าความแข็งแกร่งของรายได้ในไตรมาสนี้มีสาเหตุหลักมาจาก ASP ของผลิตภัณฑ์หลักทั้งสองรายการ ควบคู่ไปกับรายได้จาก DecisionDx-SCC ที่ดีกว่าแบบจำลอง โดยการจัดเก็บเงินจากงวดก่อนไม่ได้เป็นปัจจัยสำคัญ และฝ่ายบริหารคาดว่าพัฒนาการของ ASP ในปัจจุบันจะมีความยั่งยืนในระยะใกล้ถึงระยะกลาง

ความคุ้มครองของ DecisionDx-SCC: ฝ่ายบริหารระบุว่า ร่างการกำหนดความคุ้มครองระดับท้องถิ่น (LCD) ไม่ว่าจะมีการประชุมคณะกรรมการที่ปรึกษาผู้รับเหมาของ Medicare หรือไม่ก็ตาม อาจปรากฏออกมาอย่างสมเหตุสมผลภายในไม่กี่เดือนหรือไม่กี่ไตรมาสข้างหน้า แต่ไม่ได้ระบุกรอบเวลาที่เป็นทางการ

ความคืบหน้าของโครงการพัฒนาผลิตภัณฑ์: คาสเซิลคาดว่าจะรายงานความคืบหน้าของโครงการพัฒนาผลิตภัณฑ์ ซึ่งรวมถึงความร่วมมือกับ Cybin ในช่วงครึ่งแรกของปี 2027 แต่ไม่ได้ระบุวันที่แน่ชัด

โอกาสระยะยาวในตลาดมะเร็งผิวหนังเมลาโนมา: ฝ่ายบริหารระบุว่า ความสำเร็จในการพัฒนาวัคซีนรักษามะเร็งเฉพาะบุคคลสำหรับโรคในระยะเริ่มต้น อาจขยายบทบาททางคลินิกของ DecisionDx-Melanoma ในท้ายที่สุด โดยช่วยระบุผู้ป่วยที่มีความเสี่ยงสูงซึ่งอาจเป็นกลุ่มเป้าหมายสำหรับการรักษาเสริม (adjuvant treatment)

บันทึกการประชุมแถลงผลประกอบการฉบับเต็ม

บทถอดเสียงฉบับเต็มของการประชุมทางโทรศัพท์ผลประกอบการ

คำชี้แจงจากฝ่ายบริหาร

Operator

Good afternoon and welcome to Castle Biosciences' third quarter 2026 conference call. As a reminder, today's call is being recorded. We will begin today's call with opening remarks and introductions, followed by a question-and-answer session. I would now like to turn the call over to Camilla Zuccaro, Vice President of Investor Relations and Corporate Affairs.

Camilla Zuckero

Thank you, operator. Good afternoon, everyone. Welcome to Castle Biosciences' third quarter 2026 results conference call. Joining me today are Castle's Founder, President, and Chief Executive Officer, Derek Maetzold, and Chief Financial Officer, Frank Stokes. Information recorded on this call speaks only as of November 5, 2026. Therefore, if you are listening to the replay or reading the transcript of this call, any time-sensitive information may no longer be accurate. A recording of today's call will be available on the Investor Relations page of the company's website for approximately 3 weeks following the conclusion of the call.

Before we begin, I would like to remind you that some of the statements made today will contain forward-looking statements, including statements about expected addressable markets, statements containing projections regarding future events or our future financial or operational results and performance, including our anticipated 2026 total revenue, test report volume growth guidance, and positive adjusted EBITDA for the fourth quarter, full year 2026, and full year 2027, and the impact of our investments and growth initiatives, including our ability to achieve long-term growth and drive stockholder value.

Forward-looking statements are based upon current expectations and involve inherent risks and uncertainties, and there can be no assurances that the results contemplated in these statements will be realized. A number of factors and risks could cause actual results to differ materially from those contained in these forward-looking statements. Please refer to the risk factors in our most recent SEC filings for more information.

These forward-looking statements speak only as of today, and we assume no obligation to update or revise these forward-looking statements as circumstances change. In addition, some of the information discussed today includes non-GAAP financial measures, such as adjusted revenue, adjusted gross margin, and adjusted EBITDA that have not been calculated in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which has been posted on the Investor Relations page of the company's website. I will now turn the call over to Derek.

Derek Maetzold

Thank you, Camilla, and good afternoon, everyone. Our team closed out a very successful third quarter, reflecting our focused execution and disciplined expense management, underscored by the clinical value our tests provide to clinicians and their patients. We delivered revenue of $102.9 million, 24% growth compared to the third quarter of 2025, primarily driven by TissueCypher test report volume, which grew by 47% compared to the third quarter of 2025. We generated $19.7 million in net cash provided by operating activities, and ended the quarter with cash, cash equivalents, and marketable investment securities totaling approximately $278 million.

We are increasing our full year 2026 total revenue guidance from our prior range of $365 million to $375 million to $385 million to $395 million. This represents a $20 million increase at the midpoint, reflecting our year-to-date performance and anticipated continued strength in TissueCypher test volume growth. Importantly, at the midpoint, our updated guidance represents a $45 million increase from where we entered the year. Now, I will walk you through the business highlights from the third quarter, and then Frank will provide additional financial highlights before we turn to your questions.

First, let me take a moment to thank the Castle team. Without each person's dedication to serving our patients, we would not be in the strong financial position we are in today. So thank you, Team Castle. Now, let's start with our core revenue drivers for 2026, DecisionDx-Melanoma and TissueCypher. For DecisionDx-Melanoma, we delivered 10,177 test reports in the third quarter of 2026, marking our fifth consecutive quarter exceeding 10,000 test reports and contributing to 5% year-over-year volume growth through the first 9 months of 2026 compared to the first 9 months of 2025.

DecisionDx-Melanoma remains a central priority for our dermatology commercial organization. We've aligned commercial focus and incentive structures to reinforce that priority while leveraging our established customer relationships to increase use of our broader portfolio of dermatology tests. Our objective is to drive continued adoption of DecisionDx-Melanoma while building future growth opportunities across our dermatology tests.

With DecisionDx-Melanoma continuing to provide a durable foundation for our dermatology business and reflecting third quarter and year-to-date test report volume, we are refining our outlook for full year 2026 DecisionDx-Melanoma test volume growth and now expect mid-single-digit year-over-year growth compared with 2025.

Now, turning to TissueCypher, during the third quarter, we delivered 15,574 test reports, representing strong growth of 47% compared to the third quarter of 2025. This performance reflects continued momentum in our commercial execution, driven by increased utilization among our existing clinician base, and to a lesser degree, the addition of new ordering clinicians. Based on our year-to-date performance, we are reiterating our expectations for full year 2026 TissueCypher test report volume growth of 50% to 52% compared to 2025.

Alongside the strong commercial performance, we remain focused on expanding the body of clinical evidence supporting TissueCypher's utility and helping physicians make more informed, risk-aligned management decisions for patients with Barrett's esophagus. In September, we announced the publication of a new decision-modeling study in the Annals of Gastroenterology. This study, which leveraged data from 699 patients across 5 previously published clinical validation studies, demonstrated that incorporating TissueCypher results into clinical decision-making could significantly improve the proportion of patients receiving appropriate management, including in patients with nondysplastic and short-segment Barrett's who are considered clinically to be at lower risk for neoplastic progression.

In patients with nondysplastic Barrett's disease whose disease did progress, use of TissueCypher to guide management decisions increased appropriate management in the form of endoscopic eradication therapy or short-interval surveillance from 30.4% to 56.9%. Notably, among patients with nondysplastic Barrett's who later progressed to high-grade dysplasia or esophageal cancer, TissueCypher-guided management would have nearly doubled the proportion of patients receiving appropriate escalation of care from approximately 30% to 57%, while also reducing unnecessary procedures among those patients who did not progress. We believe these findings add to the growing body of evidence supporting TissueCypher's clinical value and further reinforce its role in helping physicians tailor patient management based on individualized risk of disease progression.

Now, let me move back to dermatology and focus on our AdvanceAD-Tx test. During the third quarter of 2026, we delivered 1,109 test reports, reinforcing the value of our AdvanceAD-Tx test. We are particularly pleased with the recent publication of a new study in Dermatology and Therapy highlighting (1) the challenges patients with moderate-to-severe atopic dermatitis experience in achieving their treatment goals, and (2) strong patient interest in molecular testing to help guide systemic therapy selection. Among patients who had been treated with targeted systemic therapies, 55% modified their treatment due to lack of efficacy.

Overall, 83% of respondents expressed interest in molecular testing to guide treatment selection, increasing to 94% among those open to initiating a new systemic therapy. Further, in a real-world clinical use study that was presented in June at the Revolutionizing Atopic Dermatitis, or RAD, Conference, found 98% of patients tested had their systemic treatment aligned with our AdvanceAD-Tx test results, meaning that 94% interest in patients new to systemic therapy who are interested in molecular testing aligns well with the 98% that Dr. Ames and colleagues reported at the RAD conference. We believe these findings support the clinical impact that our test is having on patient care. And with that, I will now turn the call over to Frank.

Frank Stokes

Thank you, Derek. Good afternoon. Reiterating Derek's sentiment, we're pleased with our strong financial results for the third quarter of 2026. Revenue was $102.9 million for the quarter, an increase of 24% over the third quarter of 2025, driven primarily by strong TissueCypher test volume growth. For total revenue for 2026, we are raising our revenue guidance to $385 million to $395 million, up from the previously provided range of $365 million to $375 million. This increase is primarily due to anticipated TissueCypher test volume growth and, to a lesser extent, ASP improvement.

Our gross margin during the third quarter of 2026 was 75% compared to 75% in the third quarter of 2025. Our adjusted gross margin, which excludes the effects of intangible asset amortization related to our acquisitions and excludes the effects of revenue adjustments in the current period associated with test reports delivered in prior periods, was 77% compared to 77% for the same period in 2025.

Turning to expenses, our total operating expenses, including cost of sales for the third quarter of 2026, were $105.6 million compared to $89.8 million for the third quarter of 2025. Sales and marketing expenses for the quarter were $37.7 million compared to $32.8 million for the same period in 2025, primarily driven by higher personnel costs and higher expenses associated with travel. Higher personnel costs reflect headcount additions in our commercial teams, as well as merit and annual inflationary wage adjustments for existing employees.

General and administrative expenses were $26.1 million for the quarter compared to $23.1 million for the same period in 2025, primarily attributable to higher information technology-related costs and higher personnel costs. Higher personnel costs reflect headcount expansions in our administrative functions, as well as merit and annual inflationary wage adjustments for existing employees.

Cost of sales expenses were $23.9 million in the third quarter of 2026 compared to $18.7 million in the third quarter of 2025, primarily due to higher personnel costs, higher expenses for lab supplies, and higher lab services costs. The increase in lab supplies and lab services costs reflects higher test report volumes. Increases in personnel costs reflect a higher headcount due to higher test volumes, investment additions made to support planned business growth in response to growing test report volumes, as well as merit and annual inflationary wage adjustments for existing employees.

R&D expenses were $15.8 million for the quarter compared to $13 million for the same period in 2025, primarily due to higher personnel costs driven by increased headcount to support ongoing research activities and continued business growth related to our pipeline initiatives. Total non-cash stock-based compensation expense, which is allocated among cost of sales, R&D, and SG&A expense, was $11.2 million for the third quarter of 2026 compared to $12.1 million in the third quarter of 2025.

Interest income was $2.5 million for the third quarter of 2026 compared to $2.8 million in the third quarter of 2025. Net loss for the third quarter of 2026 was $4.1 million compared to a net loss of $0.5 million for the third quarter of 2025. Diluted loss per share for the third quarter was 13 cents compared to diluted loss per share of 2 cents for the same period in 2025. Adjusted EBITDA for the third quarter was $12.7 million compared to $9.2 million for the comparable period in 2025.

We continue to expect positive adjusted EBITDA for the fourth quarter and full year 2026. Importantly, absent a change in strategic direction, we also expect adjusted EBITDA for the full year of 2027 to be positive. Net cash provided by operating activities was $19.7 million for the third quarter of 2026, and net cash provided by operating activities was $12.8 million for the 9 months ended September 30, 2026. As of September 30, 2026, we had cash, cash equivalents, and marketable investment securities of approximately $278 million. Importantly, our strong balance sheet continues to provide financial flexibility to invest in our growth priorities.

In closing, we delivered strong third quarter results, including strong top-line growth, positive adjusted EBITDA and operating cash flow, and an upward adjustment to our annual revenue guidance of $20 million at the midpoint. I'll now turn the call back over to Derek.

Derek Maetzold

Thank you, Frank. In summary, we remain focused on serving our patients and clinicians, driving operational excellence and advancing our growth initiatives, including advancing our pipeline to deliver long-term value for stockholders. I want to thank the entire Castle team. Our consistent execution is a direct reflection of their contribution, and I'm grateful for their effort and commitment. Thank you for your continued interest in Castle Biosciences. Now we'll be happy to take your questions. Operator?

Operator

[Operator Instructions]

Our first question comes from Bradley Bowers with Mizuho.

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Bradley Bowers

Just wanted to ask on TissueCypher here, you know, obviously a nice step-up in what's typically, I guess, procedurally, seasonally, like a little bit slower, 3Q versus 2Q. Just wanted to hear about what you're seeing in that business in terms of trend, how we should kind of think about fourth quarter, whether that's contemplated in the guidance, and then just kind of the pace of penetration, what you think you need to guidelines to go deeper. Just any thoughts on that. Thank you.

Derek Maetzold

Sure, thanks for joining us here. Still real happy with TissueCypher. We're probably around 15% penetrated on a run rate basis in terms of the eligible procedures a year. The procedures there are surveillance endoscopy for Barrett's, and it looks like we're about 15% penetrated on that. But, yes, I think the trends will continue through the end of the year that we've seen. The guidance certainly contemplates that. We've got a nice early start in that test here in the early years and still plenty of room to go, but good solid quarter for the test. We see it continuing through the end of the year and we like the business quite a bit.

Bradley Bowers

Got it. That's helpful. Just maybe one other one on profit. Gross margin actually held on a bit better than I think we were expecting. I know that there were some one-time pricing items in 1H that would imply that I guess most of this was organic, or are we still kind of expecting a falloff and what should we be thinking about kind of into the end of the year and next year. Thank you.

Derek Maetzold

I think adjusted gross margins stay pretty consistent through the year here. We've done some nice work in the lab improving our efficiencies there. Some of it's with people, some's with technology. But I think that number's probably pretty durable through the year. Importantly there, a big part of that is the number of unpaid tests. And so it looks like that's kind of staying consistent through the year as well.

Operator

Our next question comes from Max Masucci with Roth Capital Partners.

Max Masucci

Just first one, even if you carry forward the Q3 beat, the implied Q4 guide is strong. So talk about, are there any sort of emerging drivers or areas of outperformance that are powering that Q4 implied strength? And is that coming from the core business or any sort of new incremental contributors?

Derek Maetzold

No, just core business, Max, good to talk to you. Just continuing to see the core business do well through the end of the year.

Max Masucci

Okay, got it. And so moving to DecisionDx-Melanoma, I think previously called out reps adjusting to selling multiple tests. Just curious, just looking for a little bit more detail on the growth trends for DecisionDx-Melanoma in the quarter and if there's anything, any impact coming from softer ordering or competitive pressures. So really just structural versus kind of transitory factors in the quarter.

Derek Maetzold

Yes, this is Derek. Good to hear you. Certainly nothing structural. We remain on target to reach our volume guidance that we provided at the start of the year, so nothing's changed from that perspective, and we're quite pleased with the year-to-date growth and the expectation we have for the fourth quarter.

Max Masucci

Okay, got it. Maybe I'll sneak one more quick one in. It's great to see the TissueCypher volumes for, I believe, the first time. It looks like it implies a strong sequential ramp this quarter. So, what are the headline takeaways for that launch, I guess, even year to date? Just more broadly, how should we think about the role of that test within your portfolio and the commercial potential over the longer term?

Derek Maetzold

And, Max, you broke up for just a minute there. Which test were you asking about?

Max Masucci

Esopredict.

Derek Maetzold

Esopredict, sure. So, when we acquired the test, we saw an opportunity there to potentially incorporate that into the patient flow for our broader Barrett's prognostic business. And so it's not a large number, but occasionally we do have samples we get in that we can't get adequate tissue to run TissueCypher on. Esopredict is a different technology, so we're able to, in many cases, pivot that over and provide a test report using Esopredict. And that's really more about, you know, certainly we want to be able to provide a clinical answer for as many patients as we can. So by incorporating that into the flow, again, it's not a big piece of business, but if you're one of those patients or their physician and there's an issue with the tissue and you can't quite get the answer we need with TissueCypher, it's quite comforting and clinically beneficial to be able to pivot that over to Esopredict and provide a clinical answer.

So I guess the summary there is it's doing exactly what we hoped it would do when we made that acquisition just a bit over a year ago.

Max Masucci

Great, thanks team.

Operator

Our next question comes from Subbu Nambi with Guggenheim Securities.

Unknown Speaker

Hi guys, this is Ethan on for Subbu. You know, just on AdvanceAD-Tx, CMS proposed gap fill instead of the panel's recommendation of crosswalk. I was just wondering if you submitted a comment or are seeking an alternative there. And if gap fill is the final decision, does that change anything about assumptions for Medicare revenue or your commercial payer negotiations?

Derek Maetzold

Yes, Ethan, this is Derek. Good questions there. We were surprised to go ahead and see CMS not only with our AdvanceAD-Tx test, but also other tests that are being priced, I don't want to say ignore or set aside the advisory panel's recommendations and go to gap fill. Yes, we did submit appropriate additional crosswalk tests that actually had private payer data. I think schedule-wise, if you aren't aware of this, I think they anticipate probably taking a little bit longer to post this year for the final recommendations. It usually comes around Thanksgiving week, but I think we've been led to believe it could be early December. And I think we have logic that would say they should be crosswalking to an existing gene expression profile test run on NGS in which there is private payer data.

Operator

Our next question comes from Mason Carrico with Stephens.

Mason Carrico

So ASP has obviously been strong throughout this year. Could you just talk through some of maybe the coverage wins that have helped drive that and maybe your expectations around the durability of ASP moving forward or any maybe near-term incremental gains that you have visibility into today?

Derek Maetzold

Yes, thanks for the question, Mason. As you know, we don't typically talk about coverage decisions, and we'll probably continue to take that stance. We're pleased with what we're seeing on the ASP front. It represents both—I think it's a durable patient mix, Mason. I think that those, that progress is probably durable. We don't necessarily model incremental upside going forward, and if we see it, we'll take it. But I think we're pleased with where we've gotten on both of our primary drivers here.

And I think we expect that progress to be durable for the near to midterm here.

Mason Carrico

Got it. Okay, thanks. And maybe moving to dermatology here, could you expand, I guess, or give us some color on what the split looked like from a commercial standpoint across kind of your three core dermatology products and maybe how we should think about how much time the commercial team is spending on each as we move into 2027 and ADTX kind of volumes open up?

Derek Maetzold

Yes, and by split you mean sort of time and focus.

Mason Carrico

Focus on, exactly. Yes.

Derek Maetzold

Yes, still, ooh. We're still very much focused on melanoma. We certainly haven't abandoned SCC. As you can see from the volumes, it's still a very clinically relevant test. We've not meaningfully supported that from a marketing perspective for several quarters here, but the volumes have stayed, to me, impressive. I think that speaks to one, the value of that clinical information to physicians, and we talked with you before about the chance and the decision they have with a high-risk SCC patient, particularly of a Medicare age who may be more fragile from a health perspective otherwise anyway, and trying to make that really hard decision about whether to send that patient to adjuvant radiation therapy or not. I think that we're—we don't have to say anything. The volume says that that's a clinically very, very important test.

AD is, we're just not really putting a lot of force behind it while we go through the process here of figuring out what the ASPs are going to look like. And we'll make that decision soon. And it's really—there's a lot of value in that test as well. There's a lot of economic benefit from the test. But for now, we're still really focused, the derm team, primarily on melanoma and that business in progress.

Mason Carrico

Got it. Thanks, guys.

Operator

Our next question comes from Kyle Mikson with Canaccord Genuity.

Unknown Speaker

Hi, this is Charlotte Maurer on for Kyle Mikson. First, on DecisionDx-SCC, volume has remained under pressure following the loss of Medicare coverage. Where does that process stand today? And what should we view as the next meaningful milestone? Is a CAC meeting in the first half of 2027 a reasonable expectation or how do you think we should think about the potential timing from there to a draft LCD and then ultimately coverage? Thanks.

Derek Maetzold

That's actually a question for Charlotte. This is Derek here. I think our expectation or guidance we put out will be certainly we don't have in our 2027 revenue any assumptions for recovering Medicare coverage in '27, so we put it into our '28 plan right now. I think seeing a draft LCD come out with or without a CAC meeting is probably a reasonable expectation. There's nothing formal for us to go and provide you with at this time, but I think certainly something which to go and see the next couple of months, next quarter or two, is not an unreasonable expectation.

Unknown Speaker

Great, thank you. And then if I could ask another question. Total revenue during the quarter came in well ahead of expectations. Given the volume performance across DecisionDx-Melanoma and TissueCypher, could you help us bridge where that revenue upside maybe came from and then what drove that guidance increase? How much is driven by stronger ASPs or prior period collections across your core products versus like volume or other factors? Thanks.

Derek Maetzold

Yes, sure. Prior period wasn't really a big factor in there. The drivers were primarily ASPs on our two lead products, and we did have some ahead of expectation SCC revenue. We don't break it out, but it was certainly ahead of what we had this time last year, what we modeled it would be. Primarily ASP, a little bit of volume on SCC, but just good solid progress from the core drivers of revenue. And as it relates to the revised guidance, I think what you see is that's reflective of our confidence in the state of play for Q3 continuing into Q4 through the end of '26 here.

Operator

Our next question comes from Matthew Parisi with KeyBank Capital Markets.

Matthew Parisi

Hi, yes, this is Matthew Parisi on for Paul Knight at KeyBank Capital Markets. You called out the increase in lab headcount to handle the increase in test volumes that you're seeing. Should we expect to continue to see lab headcount and expenses rise with the rising test volumes or do you now have the infrastructure in place to be able to kind of handle them going forward?

Derek Maetzold

Definitely, as volumes grow, headcount in our COGS area in the labs does grow along with it. It's not 1-for-1. We get leverage and we get incremental efficiencies, but the technology in the lab is very good. The efficiency is very good. But it's just a matter of bandwidth. You have to have—as the volumes grow, we will have to add people in both facilities, Pittsburgh and Scottsdale, and we would expect to see that going forward as well.

Matthew Parisi

Awesome, appreciate the insight. And then if I can squeeze in one more, would you expect any long-term impact for DecisionDx-Melanoma stemming from the Moderna personalized cancer vaccine readout? Just kind of what you're thinking about that long term.

Derek Maetzold

Yes, I think that potentially could be a very interesting area of driving DecisionDx-Melanoma growth over the long term. As you may recall, today there are adjuvant therapies, PD-1 inhibitors, ipilimumab approved for stage 2B, 2C, and stage 3 patients. Unfortunately, of course, the majority of patients who we test are really earlier, which are kind of stage 1 to 2A. So there are no really adjuvant therapies available today. So most of our clinical use, as you know, is going to be either avoiding or opting out of a surgical biopsy procedure.

And also then if you happen to have a high-risk DecisionDx-Melanoma test result, we see many physicians pushing forward on either implementing routine imaging, some are adopting early use of ctDNA, to kind of look for early recurrences. So those are important actionable steps because we have seen that if you can initiate immunotherapy when a metastatic spread is detected when it's small, which is usually asymptomatic and picked up on imaging or ctDNA trends, then those patients have a higher likelihood of a more robust response.

I think the hope would be that as the vaccines progress, and assuming that the developments are all successful, that those could hopefully move into earlier stage patient populations of the ones that we are more routinely testing, and I think then the thesis becomes, well, now you have a dermatologist, a surgeon, a medical oncologist saying, "Okay, I have a lower-risk patient by staging, but a very high risk by the Castle DecisionDx-Melanoma test. This is a patient we should preferentially look to initiate that adjuvant therapy." So I think that's where we see it going. If that's where your question was heading, that's where I hope the marketplace gets to.

Matthew Parisi

Great. Thank you.

Operator

Our next question comes from Thomas Flaten with Lake Street Capital.

Thomas Flaten

Just a quick one on the pipeline. What cadence of news and activities should we anticipate over 2027, particularly with respect to the Cybin collaboration?

Derek Maetzold

We haven't released much timeframe, I think. I thought we had talked about it in third quarter earnings. In the first half of next year, we expect to go ahead and have updates on pipeline progress, but I think beyond that, we're not prepared to go give you any more specific dates or months at this point in time, Thomas.

Thomas Flaten

Got it. No worries. And then Frank, just if I'm doing my back-of-the-envelope math correctly here, the midpoint of the guide implies a slightly down to flat fourth quarter over third quarter. Is that just conservatism baked in or are there other things we should be attentive to? And I apologize if we're retreading ground here.

Derek Maetzold

No, no, your math is good. Typically Q4 can be a little bit seasonally lighter just as practices—there's a big range of how medical practices handle the December holidays. That treatment of the holidays tends to disrupt part of the quarter a little bit. So that's all you're seeing there.

Thomas Flaten

Got it. Appreciate it. Thank you.

Operator

Our next question comes from Puneet Souda with Leerink Partners.

Unknown Speaker

Hi everyone, this is Carlos Penikis on for Puneet. So, you know, one thing that we've seen emerge this year has been a bit more seasonality in TissueCypher. And, you know, if I'm doing my math right, you know, I think sequentially you're going to be up around 1,000 units in the fourth quarter compared to just shy of 600 this quarter, and we saw the seasonality between Q1 and Q2 as well. So you're not asking for a 2027 guide yet, but it'd be helpful to think about how you folks are thinking about the seasonality in the context of future years for what is still a very rapidly growing test that's penetrating an underpenetrated market and how those factors balance with each other.

Derek Maetzold

Yes, you know, with all of our therapeutic areas and all of our tests within those areas, there's definitely going to be seasonality. And sometimes you'll hear it called out, maybe there's a weather event, or maybe there's a holiday or something like that. So quarter to quarter, the number of business days in a quarter may be close, but the number of those days that are actually operating days varies from quarter to quarter. I would expect we've always seen that. But when you're in the earlier growth stages, you're growing through it and the growth camouflages that. We don't really have any particular strategy or tactic to try to manage that. Our teams have quarterly expectations and they don't change based on—for better or for worse, they're consistent regardless of where it falls in the calendar.

But the other thing just to keep in mind through this year is we have had a couple of changes in the size of the sales force on TissueCypher. And so that causes a—the good news is you add sales reps, you've got a bigger megaphone, but short term there are some dislocations in coverage and sometimes that can create a little bit of bumpiness as well. I expect we'll see that with TissueCypher going forward. It doesn't really change our view on the opportunity or how we execute against it. It just means that some quarters you get more working days than others, and sometimes those working days are more fruitful than others. So no real change and just sort of a—I think it's just the reality of the business.

Unknown Speaker

All right, thanks. That's really helpful. Appreciate it. And staying on TissueCypher, you know, we've talked a little bit about, you know, I think you're starting to see some wins with commercial payers for TissueCypher just based on the utility of the test and how it really is guiding therapy. So, you know, it would be great to get some color on how significant this ASP contribution is right now and how significant it could be as we look forward over the next few years.

Derek Maetzold

I would assume ASPs are steady from here. We hope to see upside, but as you note, it's difficult to predict both scale and timing. I think that when you look at the ability to identify really high-risk patients that weren't being appropriately surveilled and the benefits of that, I think that resonates with certainly clinicians, but also payers as well. And then you have the other side of the coin. You have the patient who might have been oversurveilled and you can downgrade that and have a very beneficial impact on the patient's care as well as on the cost of that care. We continue to work very hard to demonstrate the clinical utility and the economic benefit to payers, and we would hope and expect to continue to have successes through the next couple years, but in terms of modeling and how we look at the business, we just sort of assume we're going to hold where we are and we'll take the win when it comes.

Unknown Speaker

All right. Thanks. Very helpful.

Operator

Our next question comes from Mark Massaro with BTIG.

Unknown Speaker

This is Megan on for Mark. So we're just curious if you have an update on the size of the sales team since Q2, especially with regards to TissueCypher, with volumes up, and we're just looking to see if there's any new territories being opened or if the current headcount is sufficient to sustain the growth that we've been seeing.

Derek Maetzold

Megan, did I hear that correctly? You're just looking for sales force on both sides, right? Both are around 100, or under 100, and we think both are sufficient for now. I don't think we had—it's been a bit since we had an expansion to either side. I think second quarter was the TissueCypher most recent expansion. So those, if our historical norms in terms of when the new area managers or sales representatives become operational, that's kind of a 5 to 6-month in our model. So we should expect to see some impact here in the fourth quarter, but more so going into 2027. So I think we are set up well for continued growth in 2027 based on our investments this year.

Unknown Speaker

Great. Thank you, guys.

Operator

We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Derek Maetzold for closing comments.

Derek Maetzold

Thank you. This concludes our third quarter 2026 earnings call. Thank you again for joining us today and for your continued interest in Castle Biosciences. Thanks, everybody.

Operator

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

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