cstl-20260930

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38984

CASTLE BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)


Delaware						77-0701774
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1500 W. Parkwood Ave, Suite 400, Friendswood, Texas						77546
(Address of principal executive offices)						(Zip Code)

(866) 788-9007

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	CSTL	The Nasdaq Global Market
	CSTL	Nasdaq Texas, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2026, there were 30,818,291 shares of common stock, $0.001 par value per share, issued and outstanding.

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		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2026 (Unaudited) and December 31, 2025	1
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2026 and 2025	2
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2026 and 2025	3
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025	6
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46

PART II.	OTHER INFORMATION	47
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
SIGNATURES		52

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	September 30, 2026		December 31, 2025
ASSETS	(unaudited)
Current Assets
Cash and cash equivalents	$	77,994	$	116,729
Marketable investment securities	199,671		182,776
Accounts receivable, net	52,101		43,382
Inventory	10,381		10,254
Prepaid expenses and other current assets	16,710		7,956
Total current assets	356,857		361,097

Long-term accounts receivable, net	1,264		1,878
Property and equipment, net	111,461		97,443
Operating lease assets	13,970		14,795
Goodwill and other intangible assets, net	91,492		99,574
Other assets – long-term	4,364		3,769
Total assets	$	579,408	$	578,556
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	13,225	$	18,711
Accrued compensation	33,399		38,287
Contingent consideration	—		1,000
Operating lease liabilities	1,644		1,325
Current portion of long-term debt	4,167		417
Other accrued and current liabilities	15,177		8,937
Total current liabilities	67,612		68,677
Long-term debt	5,917		9,640
Noncurrent portion of contingent consideration	—		1,500
Noncurrent operating lease liabilities	24,609		25,217
Noncurrent finance lease liabilities	237		314
Deferred tax liability	2,398		2,335
Other liabilities	191		—
Total liabilities	100,964		107,683
Commitments and Contingencies (Note 12)
Stockholders’ Equity
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized as of September 30, 2026 and December 31, 2025; no shares issued and outstanding as of September 30, 2026 and December 31, 2025	—		—
Common stock, $0.001 par value per share; 200,000,000 shares authorized as of September 30, 2026 and December 31, 2025; 30,771,453 and 29,686,314 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively	31		30
Additional paid-in capital	723,871		694,860
Accumulated deficit	(244,966)		(224,284)
Accumulated other comprehensive (loss) income	(492)		267
Total stockholders’ equity	478,444		470,873
Total liabilities and stockholders’ equity	$	579,408	$	578,556

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
NET REVENUES	$	102,891	$	83,043	$	290,116	$	257,219
OPERATING EXPENSES
Cost of sales (exclusive of amortization of acquired intangible assets)	23,919		18,704		68,152		52,713
Research and development	15,807		12,960		44,778		38,335
Selling, general and administrative	63,792		55,907		194,813		172,592
Amortization of acquired intangible assets	2,104		2,276		6,581		32,562
Total operating expenses, net	105,622		89,847		314,324		296,202
Operating loss	(2,731)		(6,804)		(24,208)		(38,983)
Interest income	2,512		2,833		7,413		8,876
Net (losses) gains on equity securities	(3,425)		3,561		(2,033)		3,321
Interest expense	(197)		(24)		(524)		(62)
Other income (expense)	39		48		(553)		48
Loss before income taxes	(3,802)		(386)		(19,905)		(26,800)
Income tax expense (benefit)	298		115		777		(4,974)
Net loss	$	(4,100)	$	(501)	$	(20,682)	$	(21,826)

Loss per share:

Basic	$	(0.13)	$	(0.02)	$	(0.69)	$	(0.76)
Diluted	$	(0.13)	$	(0.02)	$	(0.69)	$	(0.76)

Weighted-average shares outstanding:
Basic	30,633		29,073		30,112		28,868
Diluted	30,633		29,073		30,112		28,868

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Net loss	$	(4,100)	$	(501)	$	(20,682)	$	(21,826)
Other comprehensive loss:
Net unrealized (loss) gain on marketable investment securities	(236)		201		(759)		10
Comprehensive loss	$	(4,336)	$	(300)	$	(21,441)	$	(21,816)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
BALANCE, JANUARY 1, 2025	28,483,195	$	28	$	655,703	$	(200,126)	$	230	$	455,835
Stock-based compensation expense	—	—		11,179		—		—		11,179
Exercise of common stock options	6,331	—		18		—		—		18
Issuance of common stock from vested restricted stock units, net of shares withheld for taxes	251,970	1		(2,517)		—		—		(2,516)
Issuance of common stock under the employee stock purchase plan	103,441	—		1,737		—		—		1,737
Net unrealized loss on marketable investment securities	—	—		—		—		(99)		(99)
Net loss	—	—		—		(25,848)		—		(25,848)
BALANCE, MARCH 31, 2025	28,844,937	$	29	$	666,120	$	(225,974)	$	131	$	440,306
Stock-based compensation expense	—	—		11,208		—		—		11,208
Exercise of common stock options	10,664	—		19		—		—		19
Issuance of common stock from vested restricted stock units, net of shares withheld for taxes	125,550	—		(588)		—		—		(588)
Net unrealized loss on marketable investment securities	—	—		—		—		(92)		(92)
Net income	—	—		—		4,523		—		4,523
BALANCE, JUNE 30, 2025	28,981,151	$	29	$	676,759	$	(221,451)	$	39	$	455,376
Stock-based compensation expense	—	—		12,100		—		—		12,100
Exercise of common stock options	4,000	—		77		—		—		77
Issuance of common stock from vested restricted stock units and performance-based restricted stock units, net of shares withheld for taxes	119,255	—		(1,185)		—		—		(1,185)
Issuance of common stock under the employee stock purchase plan	57,457	—		978		—		—		978
Net unrealized gain on marketable investment securities	—	—		—		—		201		201
Net loss	—	—		—		(501)		—		(501)
BALANCE, SEPTEMBER 30, 2025	29,161,863	$	29	$	688,729	$	(221,952)	$	240	$	467,046

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
BALANCE, JANUARY 1, 2026	29,686,314	$	30	$	694,860	$	(224,284)	$	267	$	470,873
Stock-based compensation expense	—	—		9,776		—		—		9,776
Exercise of common stock options	28,494	—		322		—		—		322
Issuance of common stock from vested restricted stock units and performance-based restricted stock units, net of shares withheld for taxes	486,737	—		(6,598)		—		—		(6,598)
Issuance of common stock under the employee stock purchase plan	94,420	—		1,895		—		—		1,895
Net unrealized loss on marketable investment securities	—	—		—		—		(330)		(330)
Net loss	—	—		—		(14,522)		—		(14,522)
BALANCE, MARCH 31, 2026	30,295,965	$	30	$	700,255	$	(238,806)	$	(63)	$	461,416
Stock-based compensation expense	—	—		11,589		—		—		11,589
Exercise of common stock options	32,990	—		95		—		—		95
Issuance of common stock from vested restricted stock units, net of shares withheld for taxes	179,579	1		(818)		—		—		(817)
Net unrealized loss on marketable investment securities	—	—		—		—		(193)		(193)
Net loss	—	—		—		(2,060)		—		(2,060)
BALANCE, JUNE 30, 2026	30,508,534	$	31	$	711,121	$	(240,866)	$	(256)	$	470,030
Stock-based compensation expense	—	—		11,232		—		—		11,232
Exercise of common stock options	125,523	—		988		—		—		988
Issuance of common stock from vested restricted stock units, net of shares withheld for taxes	69,273	—		(899)		—		—		(899)
Issuance of common stock under the employee stock purchase plan	68,123	—		1,429		—		—		1,429
Net unrealized loss on marketable investment securities	—	—		—		—		(236)		(236)
Net loss	—	—		—		(4,100)		—		(4,100)
BALANCE, SEPTEMBER 30, 2026	30,771,453	$	31	$	723,871	$	(244,966)	$	(492)	$	478,444

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Nine Months Ended September 30,
	2026		2025
OPERATING ACTIVITIES
Net loss	$	(20,682)	$	(21,826)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	12,178		36,994
Stock-based compensation expense	32,597		34,487
Net losses (gains) on equity securities	2,033		(3,321)

Deferred income taxes	63		(5,321)
Accretion of discounts on marketable investment securities	(1,190)		(3,511)
Other	906		282
Change in operating assets and liabilities:
Accounts receivable	(8,105)		604
Prepaid expenses and other current assets	(8,838)		(4,535)
Inventory	(127)		(538)
Operating lease assets	873		1,016
Other assets	(768)		(54)
Accounts payable	2,279		3,095
Operating lease liabilities	(337)		(1,066)
Accrued compensation	(4,888)		(792)
Other accrued and current liabilities	6,628		1,902
Other liabilities	191		—
Net cash provided by operating activities	12,813		37,416

INVESTING ACTIVITIES
Purchases of marketable investment securities	(165,567)		(151,306)
Proceeds from maturities of marketable investment securities	138,800		135,200
Proceeds from maturities of debt securities classified as held-to-maturity	5,600		—
Purchases of debt securities classified as held-to-maturity	—		(5,569)
Proceeds from sale of equity securities	3,248		—
Asset acquisition, net of cash and cash equivalents acquired	—		(18,726)
Purchases of property and equipment	(28,597)		(28,837)
Proceeds from sale of property and equipment	21		40
Net cash used in investing activities	(46,495)		(69,198)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CASTLE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(UNAUDITED)

(in thousands)


	Nine Months Ended September 30,
	2026		2025
FINANCING ACTIVITIES
Proceeds from exercise of common stock options	1,405		114
Payment of employees’ taxes on vested restricted stock units and performance-based restricted stock units	(8,314)		(4,289)
Proceeds from contributions to the employee stock purchase plan	2,930		1,702
Payment of contingent consideration	(1,000)		—
Repayment of principal portion of finance lease liabilities	(74)		(88)
Proceeds from lease incentives received	—		190
Net cash used in financing activities	(5,053)		(2,371)

NET CHANGE IN CASH AND CASH EQUIVALENTS	(38,735)		(34,153)
Beginning of period	116,729		119,709
End of period	$	77,994	$	85,556


	Nine Months Ended September 30,
	2026		2025
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
(Decrease) increase in contingent consideration liability related to asset acquisition	$	(1,500)	$	2,500
Accrued purchases of property and equipment	$	2,414	$	4,446
Property and equipment acquired with tenant improvement allowance	$	—	$	7,224
Operating lease assets obtained in exchange for lease obligations	$	48	$	4,687
Decrease in operating lease assets with corresponding change in lease liabilities	$	—	$	(104)
Finance lease assets obtained in exchange for lease obligations	$	4	$	119

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Description of Business

Castle Biosciences, Inc. (the “Company,” “we,” “us” or “our”) was incorporated in the state of Delaware on September 12, 2007. We are a commercial-stage diagnostics company focused on providing clinicians and their patients with personalized, clinically actionable information to inform treatment decisions and improve health outcomes. We are based in Friendswood, Texas (a suburb of Houston, Texas), and our laboratory operations are conducted at our facilities located in Phoenix and Scottsdale, Arizona, and Pittsburgh, Pennsylvania.

2. 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 September 30, 2026, we had an accumulated deficit of $245.0 million. We believe our $78.0 million of cash and cash equivalents and $199.7 million of marketable investment securities as of September 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 September 30, 2026; the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of stockholders’ equity, each for the three and nine months ended September 30, 2026 and 2025; and the condensed consolidated statements of cash flows for the nine months ended September 30, 2026 and 2025 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our consolidated financial position as of September 30, 2026, the results of our consolidated operations for the three and nine months ended September 30, 2026 and 2025 and our consolidated cash flows for the nine months ended September 30, 2026 and 2025. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2026 and 2025 are also unaudited. The results for the three and nine months ended September 30, 2026 are not necessarily indicative of results to be expected for the year ending December 31, 2026, any other interim periods, or any future year or period. The balance sheet as of December 31, 2025 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission on February 26, 2026.

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CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets, the valuation of contingent consideration, and other contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions.

Cash and Cash Equivalents including Concentrations of Credit Risk

Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term United States (“U.S.”) government obligations. Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the financial institutions in which deposits are held.

Marketable Investment Securities

Our marketable investment securities are comprised of debt and equity securities. All debt securities are recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320, Investments-Debt Securities (“ASC 320”). Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such determination at each balance sheet date. Debt securities that are classified as available-for-sale (“AFS”) are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive income within total stockholders’ equity, net of any related deferred income tax effects, on the condensed consolidated balance sheets. Debt securities that are classified as held-to-maturity (“HTM”) are reported at amortized cost in accordance with ASC 320. Premiums or discounts from par value are amortized to interest income over the life of the underlying investment and are included in interest income in the condensed consolidated statements of operations. Realized gains and losses on AFS and HTM debt securities, if any, are calculated at the individual security level and included in interest income in the condensed consolidated statements of operations. Impairments of AFS or HTM debt securities, if any, are recorded in the condensed consolidated statements of operations. See Notes 5 and 11 for further details.

Our equity securities consist of investments in shares of common stock which are listed and traded on the Nasdaq Global Market and certain foreign exchanges. All equity securities are recognized in accordance with ASC Topic 321, Investments-Equity Securities (“ASC 321”) and reported at their readily determinable fair values based on quoted market prices. For equity securities denominated in a foreign currency, fair value is remeasured into U.S. dollars using exchange rates in effect at each balance sheet date in accordance with ASC Topic 830, Foreign Currency Matters (“ASC 830”). Changes in fair value attributable to market price movements are included in net gains (losses) on equity securities, while changes attributable to foreign currency exchange rate fluctuations are included in other income (losses) in the condensed consolidated statements of operations. All changes in a marketable security’s fair value are reported in earnings as they occur, and the sale of our equity securities does not necessarily give rise to a significant gain or loss. Investments in equity securities are classified as either current or long-term depending upon management’s intentions. See Notes 5 and 11 for further details.

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CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Contingent Consideration

Under the terms of business combinations or asset acquisitions, we may be required to pay additional consideration if specified future events occur or certain conditions are met. In May 2025, we acquired Capsulomics, Inc., d/b/a Previse (“Previse”), which was recorded as an asset acquisition, and agreed to pay additional consideration of up to $2.5 million in cash based on the achievement of certain commercial milestones (the “Earnout Payments”). We account for the contingent consideration as a liability in accordance with ASC 450-20, Loss Contingencies (“ASC 450-20”) when it is both probable and reasonably estimable. In accordance with ASC 450-20, we recorded the contingent consideration at the amount required to settle the respective obligation, and subsequent changes are recognized as adjustments to the cost basis of the acquired assets. These changes are allocated to the acquired assets based on their relative fair values as of the date of acquisition.

During the nine months ended September 30, 2026, we made aggregate Earnout Payments of $1.0 million following the achievement of certain commercial milestones. As of September 30, 2026, we determined that payment of the remaining Earnout Payments was no longer probable. Accordingly, we reduced the contingent consideration liability by $1.5 million with a corresponding reduction to the cost basis of the acquired assets. The contingent consideration balance was zero as of September 30, 2026.

Revenue Recognition

In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. See Note 3 for further details.

Collaborative Arrangements

We assess whether our licensing and other agreements are collaborative arrangements based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards. For arrangements that we determine are collaborations, we identify each unit of account and then determine whether a customer relationship exists for that unit of account. If we determine that a performance obligation within the collaborative arrangement is with a customer, we apply ASC 606.

If a portion of a distinct bundle of goods or services within the collaborative arrangement is not with a customer, we apply recognition and measurement based on an analogy to authoritative accounting literature or, if there is no appropriate analogy, a reasonable, rational, and consistently applied accounting policy election. To the extent the arrangement is within the scope of ASC Topic 808, Collaborative Arrangements (“ASC 808”), we assess whether aspects of the arrangement are within the scope of other accounting literature.

In June 2025, we entered into a Collaboration and License Agreement with SciBase Holding AB (“SciBase”). Following approval under the Swedish Screening of Foreign Direct Investments Act in the third quarter of 2025, we completed our investment in SciBase. The agreement aims to jointly develop products for dermatologic diseases, initially focused on atopic dermatitis, by combining SciBase’s Electrical Impedance Spectroscopy technology with our diagnostic and development expertise. Under the arrangement, we hold development and commercialization rights in North America, while SciBase retains rights in certain other territories. SciBase is entitled to royalties on our product sales, a mark-up on product sales to us, and a milestone payment upon achieving specified sales thresholds. Development costs are shared; however, SciBase deferred its initial clinical development costs for the initial indication and we will recover those costs through future royalty payments reductions.

We determined the agreement is a collaborative arrangement under ASC 808. Certain elements of the arrangement, including license rights and sales-based royalty provisions, represent transactions with a customer and are therefore accounted for under ASC 606. Other elements, such as shared development activities and cost reimbursements, are accounted for in accordance with ASC 808 and presented as reductions to research and development (“R&D”) expenses.

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(UNAUDITED)

Accounts Receivable and Allowance for Credit Losses

We classify accounts receivable balances that are expected to be paid more than one year from the condensed consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments.

We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. We have elected the practical expedient under ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”) to assume that current conditions as of the balance sheet date do not change for the remaining life of our accounts receivable. Accordingly, management’s estimates are based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of September 30, 2026 and December 31, 2025. Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses.

Convertible Loan Receivable

On November 7, 2025, we entered into a Convertible Loan Agreement with SciBase (the “Convertible Loan Receivable”), pursuant to which we loaned SEK 20.0 million, approximately $2.1 million based on the exchange rate in effect on November 7, 2025. The Convertible Loan Receivable bears interest at a rate of 2.00% plus the three-month Stockholm Interbank Offered Rate (“STIBOR”), payable quarterly. SciBase may prepay all or a portion of the Convertible Loan Receivable at any time. The Convertible Loan Receivable matures on November 7, 2030, at which time we have the option, at our sole discretion, to convert the outstanding principal plus accrued interest into shares of SciBase that are listed on the Nasdaq First North Growth Market in Sweden, receive full repayment in cash, or receive a combination of cash and shares.

We accounted for the convertible loan as a receivable within the scope of ASC Topic 310, Receivables. The carrying amount of the convertible loan is presented at amortized cost, within other assets - long-term in the condensed consolidated balance sheets. The Convertible Loan Agreement is remeasured into U.S. dollars using exchange rates in effect at each balance sheet date in accordance with ASC 830 with changes in exchange rates recognized in earnings. In addition, the embedded conversion feature to shares of SciBase did not meet the definition of a derivative and was not bifurcated from the host contract under ASC Topic 815, Derivatives and Hedging. We have determined that expected credit losses associated with the loan are insignificant and, accordingly, have not recorded a credit loss allowance under ASC Topic 326-20, Financial Instruments - Credit Losses.

Interest income on the Convertible Loan Receivable is recognized quarterly and included in interest income in the condensed consolidated statements of operations. Foreign currency transaction gains and losses resulting from the remeasurement of the Convertible Loan Receivable are included in other income (expense) in the condensed consolidated statements of operations. Accrued interest receivable is recorded within prepaid expenses and other current assets in the condensed consolidated balance sheets.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally ranging from 5 to 39 years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful life of the asset or the term of the lease. Leasehold improvements primarily relate to office and laboratory facilities in Phoenix, Arizona, Scottsdale, Arizona, and Pittsburgh, Pennsylvania, and are generally depreciated over the remaining lease terms, which expire in 2034, 2033, and 2037 respectively.

Maintenance and repairs are expensed as incurred, and material improvements are capitalized. Interest costs incurred during the construction of major capital projects are capitalized until the underlying asset is ready for its intended use, at which point the capitalized interest costs are amortized using the straight-line method over the estimated useful life of the underlying asset. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the condensed consolidated balance sheets and any resulting gain or loss is reflected in the condensed consolidated statements of operations in the period realized.

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Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment. We test goodwill for impairment in the fourth quarter of each fiscal year and when events, or changes in circumstances, indicate that it may be impaired. Events and changes in circumstances indicating that goodwill may be impaired include sustained declines in the price of our common stock, increased competition, changes in macroeconomic developments, unfavorable government or regulatory developments and changes in coverage or reimbursement conditions.

Goodwill is tested for impairment at the reporting unit level where goodwill is held. Testing begins with completion of an optional qualitative assessment. If the qualitative assessment suggests that impairment is more likely than not, quantitative testing is conducted. If the qualitative assessment is bypassed, we proceed directly to quantitative testing. Quantitative testing consists of comparing the carrying value of goodwill to its estimated fair value. Impairment of goodwill is the condition that exists when the carrying value exceeds its fair value. Amounts by which carrying value exceed fair value, up to the total amount of goodwill allocated to the reporting unit, are recognized as an impairment loss in the condensed consolidated statements of operations.

Accrued Compensation

We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of September 30, 2026 and December 31, 2025, we accrued approximately $25.3 million and $28.1 million, respectively, for liabilities associated with these bonus plans. These amounts are classified as current accrued liabilities in the condensed consolidated balance sheets based on the expected timing of payment.

Stock-Based Compensation

Stock-based compensation expense for equity instruments is measured based on the grant-date fair value of the awards. For stock option awards, and purchase rights made under the 2019 Employee Stock Purchase Plan (the “ESPP”), the fair value is estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For stock options and RSUs, the requisite service period is generally the award’s vesting period (typically four years). PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements (“Retirement Policy”). Stock-based awards falling into the scope of the Retirement Policy are accounted for as a modification of existing awards under ASC Topic 718, Compensation – Stock Compensation. The modifications do not result in the recognition of incremental compensation cost; however, they do result in a new estimate of the requisite service period, which we reassess at each balance sheet date. For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date. Forfeitures are accounted for as they occur.

Comprehensive Loss

Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss is made up of net loss plus net unrealized loss on marketable investment securities, which is our only other item of other comprehensive loss.

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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 Statement—Reporting 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 have on the consolidated financial statements and disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which modernizes the accounting for internal-use software costs. The amendments in ASU 2025-06 remove all references to prescriptive and sequential software development stages throughout ASC 350-40. The ASU is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. We are currently evaluating the impact this update will have on the consolidated financial statements and disclosures.

We have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on the consolidated financial statements or disclosures upon adoption.

3. Revenue

All of our revenues from contracts with customers are associated with the provision of testing services. Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma and our TissueCypher® test for patients diagnosed with Barrett’s esophagus. We also provide our DecisionDx®-UM test for uveal melanoma, MyPath® Melanoma test for patients with melanocytic lesions, DecisionDx®-SCC test for cutaneous squamous cell carcinoma, AdvanceAD-Tx for moderate-to-severe atopic dermatitis, and our Esopredict test as a supplemental option when TissueCypher does not produce an actionable result. 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 may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan. These situations may result in a delay in the collection of payments.

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(UNAUDITED)

The Medicare claims that are covered by Medicare are generally paid at a rate established on Medicare’s Clinical Laboratory Fee Schedule or by the respective Medicare contractor within 30 days from receipt. Medicare claims that were either submitted to Medicare prior to the local coverage determination or other coverage commencement date or are not covered but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act are generally appealed and may ultimately be paid at the first (termed “redetermination”), second (termed “reconsideration”) or third level of appeal (de novo hearing with an Administrative Law Judge). A successful appeal at any of these levels may result in prompt payment.

In the absence of Medicare coverage, contractually established reimbursements rates or other coverage, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions. Variable consideration attributable to these price concessions is measured at the expected value using the “most likely amount” method under ASC 606. The amounts are estimated using historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as the judgment and actions of third parties. Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a predictable pattern and history of collectability with a payor. Accordingly, in such situations revenues are recognized on the basis of actual cash collections. Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time. Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues. Included in revenues for the three months ended September 30, 2026 and 2025 were $0.9 million and $2.5 million of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. Included in revenues for the nine months ended September 30, 2026 and 2025 were $3.5 million and $5.4 million of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods.

These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration.

Because our contracts with customers have an expected duration of one year or less, we have elected the practical expedient in ASC 606 to not disclose information about our remaining performance obligations. Any incremental costs to obtain contracts are recorded as selling, general and administrative expenses as incurred due to the short duration of our contracts. Contract balances consisted solely of accounts receivable (both current and noncurrent) as of September 30, 2026 and December 31, 2025.

Disaggregation of Revenues

The table below provides the disaggregation of revenue by type (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Dermatologic(1)	$	47,877	$	48,523	$	137,686	$	167,782
Non-Dermatologic(2)	55,014		34,520		152,430		89,437
Total net revenues	$	102,891	$	83,043	$	290,116	$	257,219

(1)Consists of DecisionDx-Melanoma, DecisionDx-SCC, MyPath Melanoma, and AdvanceAD-Tx.

(2)Consists of TissueCypher, DecisionDx-UM, Esopredict and IDgenetix.

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(UNAUDITED)

We have presented disaggregated net revenues included in our single reportable segment in the table above. The characteristics for each test in our single segment are similar, with each test having a single performance obligation. Our chief operating decision maker (“CODM”) is the single individual responsible for managing our segment and reviews consolidated results and budgets in assessing performance and in allocating resources. See Note 15 for additional information about our reportable segment.

Payor Concentration

We rely upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of our tests.

Our significant third-party payors and their related revenues, each of which accounted for more than 10% of total revenues and accounts receivable balances were as follows:


	Percentage of Revenues				Percentage of Accounts Receivable (current) as of				Percentage of Accounts Receivable (noncurrent) as of
	Nine Months Ended September 30,
	2026		2025		September 30, 2026		December 31, 2025		September 30, 2026		December 31, 2025
Medicare	40	%	45	%	23	%	18	%	*		*
Payor A	14	%	16	%	12	%	15	%	16	%	16	%
Payor B	*		*		*		22	%	*		10	%

* Less than 10%

4. Loss Per Share

Basic loss per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, vesting of RSUs and PSUs or purchases under the ESPP. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Contingently issuable PSU awards are included in the computation of diluted loss per share when the applicable performance criteria would be met and the common shares would be issuable if the end of the reporting period were the end of the contingency period. However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive.

Because we reported a net loss for all periods presented, all potentially dilutive securities are antidilutive and are excluded from the computation of diluted loss per share for such periods.

The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss per share for the three and nine months ended September 30, 2026 and 2025 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2026	2025	2026	2025
Stock options	2,621	2,893	2,697	2,941
RSUs and PSUs	4,526	4,323	4,302	4,079
ESPP	223	153	240	151
Total	7,370	7,369	7,239	7,171

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(UNAUDITED)

5. Marketable Investment Securities

Marketable investment securities consisted of the following (in thousands):


	September 30, 2026		December 31, 2025
Current marketable investment securities:
Equity securities	$	4,443	$	5,555
Debt securities - AFS	195,228		171,631
Debt securities - HTM	—		5,590
Total current marketable investment securities	$	199,671	$	182,776

On January 26, 2026, in connection with SciBase’s rights offering, we amended our subscription commitment, increasing the shares we agreed to subscribe for without subscription rights from 115.0 million to 125.0 million, and purchased subscription rights for an additional 30.5 million shares from another SciBase shareholder. In total, we acquired 155.5 million shares for $3.6 million. Following SciBase’s 1-for-100 reverse share split announced on June 4, 2026, this equals 1.55 million shares. On September 29, 2026 we subscribed for an additional 0.8 million shares. As of September 30, 2026, we determined that we did not have significant influence over SciBase.

During the nine months ended September 30, 2026, all of our HTM investments matured.

Equity Securities

The portion of unrealized gains and losses related to equity securities still held during the period is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Net (losses) gains on equity securities	$	(3,425)	$	3,561	$	(2,033)	$	3,321
Less: Net loss recognized on equity securities sold	—		—		(513)		—
Net unrealized (losses) gains recognized on equity securities still held	$	(3,425)	$	3,561	$	(1,520)	$	3,321

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(UNAUDITED)

Debt Securities

The following tables present our debt securities (in thousands):


	September 30, 2026
	Amortized Cost		Unrealized				Estimated Fair Value
			Gains		Losses
U.S. government securities - AFS	$	195,720	$	—	$	(492)	$	195,228

Total debt securities	$	195,720	$	—	$	(492)	$	195,228


	December 31, 2025
	Amortized Cost		Unrealized				Estimated Fair Value
			Gains		Losses
U.S. government securities - AFS	$	171,364	$	269	$	(2)	$	171,631
U.S. government securities - HTM	5,590		11		—		5,601
Total debt securities	$	176,954	$	280	$	(2)	$	177,232

Our AFS securities are available to be sold to meet operating needs or otherwise, but are generally held through maturity. We classify all AFS investments as current assets, as these are readily available for use in current operations. As of September 30, 2026 and December 31, 2025, all of our AFS securities had contractual maturities of one year or less.

As of December 31, 2025, we classified our HTM investments as current assets, as we had the positive intent and ability to hold these investments to maturity, and all such maturities were less than one year from the balance sheet date.

We evaluated our U.S. government securities under the AFS impairment model guidance and determined our investment portfolio is comprised of low-risk, investment grade securities.

For the three and nine months ended September 30, 2026 and 2025, unrealized losses on our AFS U.S. government securities are not attributed to credit risk. We believe that an allowance for credit losses is unnecessary because the unrealized losses on certain of our marketable investment securities are due to market factors. The allowance for credit losses was zero as of September 30, 2026 and December 31, 2025.

There were no realized gains or losses on sales of AFS debt securities for the three and nine months ended September 30, 2026 and 2025. In addition, no credit-related or noncredit-related impairment losses were recorded for the three and nine months ended September 30, 2026 and 2025.

Accrued interest receivable for our AFS U.S. government securities is included in prepaid expenses and other current assets in the condensed consolidated balance sheets. As of September 30, 2026 and December 31, 2025, the accrued interest receivable related to AFS securities was $1.3 million and $1.1 million, respectively. Accrued interest receivable related to HTM securities was immaterial as of December 31, 2025.

Additional information relating to the fair value of marketable investment securities can be found in Note 11.

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(UNAUDITED)

6. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	September 30, 2026		December 31, 2025
Land	$	7,245	$	7,245
Building	44,573		—
Lab equipment	41,930		33,034
Leasehold improvements	25,978		14,834
Computer equipment	7,938		5,920
Furniture and fixtures	7,174		3,648
Construction-in-progress	299		51,059
Total	135,137		115,740
Less: Accumulated depreciation	(23,676)		(18,297)
Property and equipment, net	$	111,461	$	97,443

In 2025, construction-in-progress related primarily to construction of our new headquarters in Friendswood, Texas, which was substantially completed in February 2026. Upon completion, we commenced depreciation of the capitalized construction costs of the building over an estimated useful life of 39 years.

In September 2026, we completed construction of and placed into service our office and laboratory facilities in Scottsdale, Arizona. At that time, we reclassified approximately $14.4 million of capitalized project costs from construction-in-progress to the applicable property and equipment categories and began recognizing depreciation expense.

Depreciation expense was recorded in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Cost of sales (exclusive of amortization of acquired intangible assets)	$	1,345	$	1,004	$	3,654	$	2,816
Research and development	172		90		457		279
Selling, general and administrative	558		446		1,486		1,337
Total	$	2,075	$	1,540	$	5,597	$	4,432

7. 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 September 30, 2026 and December 31, 2025, where all goodwill was allocated. As of September 30, 2026 and December 31, 2025, our goodwill was $10.7 million. There were no accumulated impairments of goodwill as of September 30, 2026 or December 31, 2025. See Note 15 for additional information on our reportable segment.

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(UNAUDITED)

Other Intangible Assets, Net

Our other intangible assets, net consisted of the following (in thousands):


	September 30, 2026
	Gross carrying value		Accumulated amortization		Net		Weighted-Average Remaining Life (in years)
Developed technology	$	117,000	$	(36,218)	$	80,782	9.5
Assembled workforce	563		(544)		19		0.2
Total other intangible assets, net	$	117,563	$	(36,762)	$	80,801


	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

During the first quarter of 2025, we made the decision to discontinue our IDgenetix test offering, effective May 2025. As a result of this decision, we further revised the estimated useful life of the asset and determined that the intangible asset should be fully amortized as of March 31, 2025. This change resulted in an acceleration of amortization expense of approximately $20.1 million. During the nine months ended September 30, 2026, we derecognized the gross book value and accumulated amortization related to IDgenetix from our intangible assets, net balance as of September 30, 2026.

In September 2026, we reduced the contingent consideration liability related to the Previse acquisition by $1.5 million, resulting in a corresponding reduction to the cost basis of the acquired intangible assets.

Amortization expense of intangible assets was $2.1 million and $6.6 million for the three and nine months ended September 30, 2026, respectively, and $2.3 million and $32.6 million for the three and nine months ended September 30, 2025, respectively.

8. Other Accrued and Current Liabilities

Other accrued and current liabilities consisted of the following (in thousands):


	September 30, 2026		December 31, 2025
Self-insurance liability	$	5,840	$	—
Accrued service fees	4,098		3,213
Clinical studies	2,590		2,674
ESPP contributions	530		924
Other	2,119		2,126
Total	$	15,177	$	8,937

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(UNAUDITED)

9. Long-Term Debt

Our long-term debt is presented in the table below (in thousands):


	September 30, 2026		December 31, 2025
Term debt	$	10,200	$	10,200
Unamortized discount	(116)		(143)
Total debt, net	10,084		10,057
Less: Current portion of long-term debt	(4,167)		(417)
Total long-term debt	$	5,917	$	9,640

Future maturities of principal amounts on long-term debt as of September 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, merge with or acquire other entities, incur indebtedness and make distributions to holders of our capital stock. Should an event of default occur, including the occurrence of a material adverse change, we could be liable for immediate repayment of all obligations under the 2024 LSA. Should we seek to further amend the terms of the 2024 LSA, the consent of the Lender would be required. As of September 30, 2026, we were in compliance with all of the covenants.

The 2024 LSA bears interest at a floating rate equal to the greater of (a) the WSJ Prime Rate plus 0.25% or (b) 6.00% per annum. The 2024 Term Loan was interest-only from the Closing Date through November 30, 2025, however, on August 26, 2025, we elected to exercise our option to extend the interest-only period to December 1, 2026. Beginning in December 2026, the principal payments will be made in equal monthly installments through the maturity date of November 1, 2028.

In addition, we are required to make a final payment equal to 2.00% of the aggregate original principal amounts of the 2024 Term Loan, due at maturity or upon full repayment.

2024 Term Loan

On the Closing Date, we drew $10.0 million under the 2024 Term Loan. We are obligated to make a final payment of $0.2 million under the terms of the 2024 LSA final payment provisions. A discount on debt equal to this obligation was recorded on the draw date and is being amortized as additional interest expense using the effective interest method over the term of the debt. As of September 30, 2026, no payment on principal has been made and the weighted-average effective interest rate for all outstanding debt under the 2024 Term Loan was 7.79%.

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CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Interest Expense on Long-Term Debt

Interest expense on long-term debt consisted of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Interest expense on long term debt	$	189	$	207	$	558	$	612
Less: Capitalized interest	—		(191)		(58)		(579)
Total	$	189	$	16	$	500	$	33

Capitalized interest on construction-in-progress was not material following the substantial completion of our new headquarters in Friendswood, Texas.

10. 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 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 September 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.

Friendswood Parkway Plaza Lease

On September 16, 2026, we entered into an agreement with Ferrovial Construction-Webber 99 JV to lease out approximately 29,323 square feet of office space within our corporate headquarters building in Friendswood, Texas. The lease has an initial term of 63 months and will commence upon substantial completion of landlord-constructed tenant improvements. The lease includes a tenant improvement allowance, a six-month rent abatement period, and two six-month renewal options.

As of September 30, 2026, we had not made the underlying space available for the tenant’s use, and accordingly, the lease had not commenced, and we had not recognized any lease income in our condensed consolidated financial statements.

11. 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.

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CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

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 830. The use of different assumptions, exchange rates, and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or amounts recorded, may not be indicative of the amount that we or holders of the instruments could realize in a current market exchange.

The tables below provide information, by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of September 30, 2026 and December 31, 2025 (in thousands):


	As of September 30, 2026
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Money market funds(1)	$	68,801	$	—	$	—	$	68,801
U.S. government securities - AFS(2)	$	195,228	$	—	$	—	$	195,228
Equity securities(2)	$	4,443	$	—	$	—	$	4,443
Liabilities
Term Debt(3)(4)	$	—	$	10,084	$	—	$	10,084


	As of December 31, 2025
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets
Money market funds(1)	$	108,914	$	—	$	—	$	108,914
U.S. government securities - AFS(2)	$	171,631	$	—	$	—	$	171,631
Equity securities(2)	$	5,555	$	—	$	—	$	5,555
Liabilities
Term Debt(3)(4)	$	—	$	10,057	$	—	$	10,057

(1)Classified as “Cash and cash equivalents” in the condensed consolidated balance sheets.

(2)Classified as “Marketable investment securities” in the condensed consolidated balance sheets.

(3)Classified as “Current portion of long-term debt” and “Long term debt” in the condensed consolidated balance sheets.

(4)Borrowings approximate their fair value as the interest rate is variable and reflects market rates.

As of December 31, 2025 we held U.S. government securities that were classified as HTM investments and carried at amortized costs. The fair value of our HTM investments was classified as Level 1 of the fair value hierarchy. For additional information on the carrying amount and fair value of our HTM investments, see Note 5.

The Convertible Loan Receivable with SciBase is carried at amortized cost which approximates fair value due to the variable interest rate and market-based terms of the instrument. Fair value is estimated using a discounted cash flow model. The inputs used to fair value the Convertible Loan Receivable are classified as Level 2 in the fair value hierarchy and include a three-month STIBOR and a market credit spread. For additional information on the carrying amount and estimated fair value of our Convertible Loan Receivable, see Note 2.

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CASTLE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

12. 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 government’s 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.

13. 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 September 30, 2026, 1,446,860 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 grantee’s 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 September 30, 2026, there were 609,576 shares available for grant under the amended Inducement Plan.

Stock Options

Stock option activity under our stock plans for the nine months ended September 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	(187,007)	$	7.52
Forfeited/Cancelled	(49,548)	$	48.31
Balance as of September 30, 2026	2,547,877	$	38.43	3.9	$	14,677
Exercisable as of September 30, 2026	2,547,877	$	38.43	3.9	$	14,677

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Restricted Stock Units

The following table summarizes our RSU activity for the nine months ended September 30, 2026:


	Restricted Stock Units Outstanding	Weighted-Average Grant Date Fair Value
Balance as of December 31, 2025	3,395,762	$	22.42
Granted	1,783,182	$	25.81
Vested(1)	(948,421)	$	21.89
Forfeited/Cancelled	(206,934)	$	24.09
Balance as of September 30, 2026	4,023,589	$	23.96

(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 272,792 for the nine months ended September 30, 2026.

Performance-Based Restricted Stock Units

The following table summarizes our PSU activity for the nine months ended September 30, 2026:


	Performance-Based Restricted Stock Units Outstanding	Weighted-Average Grant Date Fair Value
Balance as of December 31, 2025	350,144	$	21.72
Granted	200,512	$	28.22
Vested(1)	(88,757)	$	21.23
Forfeited/Cancelled	—	$	—
Balance as of September 30, 2026	461,899	$	24.64

(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 28,797 for the nine months ended September 30, 2026.

Employee Stock Purchase Plan

The ESPP provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 296,863 shares becoming available under the ESPP effective January 1, 2026. During the nine months ended September 30, 2026, we issued 162,543 shares of common stock pursuant to scheduled purchases under the ESPP. As of September 30, 2026, 1,304,933 shares remained available for issuance under the ESPP.

Determining Fair Value - Summary of Assumptions

The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP:


	Nine Months Ended September 30,
	2026	2025
Average expected term (years)	1.2	1.2
Expected stock price volatility	54.54% - 61.50%	56.55% - 85.21%
Risk-free interest rate	3.41% - 4.30%	3.52% - 4.22%
Dividend yield	—%	—%

We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Fair Value

There were no stock options granted for the nine months ended September 30, 2026 and 2025. For the nine months ended September 30, 2026 and 2025, the weighted-average grant date fair value of the purchase rights granted under the ESPP was $12.50 and $9.71 per share, respectively.

Stock-Based Compensation Expense

Stock-based compensation expense is included in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Cost of sales (exclusive of amortization of acquired intangible assets)	$	1,403	$	1,446	$	4,080	$	4,324
Research and development	1,611		1,950		4,732		5,807
Selling, general and administrative	8,218		8,704		23,785		24,356
Total stock-based compensation expense	$	11,232	$	12,100	$	32,597	$	34,487

Included in total stock-based compensation expense is $0.1 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively, and $1.1 million and $0.6 million for the nine months ended September 30, 2026 and 2025, respectively, from the accelerated recognition of expense for modifications of awards falling in scope of the Retirement Policy.

As of September 30, 2026, the total unrecognized stock-based compensation cost related to outstanding awards was $80.4 million, which is expected to be recognized over a weighted-average period of 2.6 years. The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur.

14. Income Taxes

Our effective tax rate was (7.8)% and (3.9)% for the three and nine months ended September 30, 2026. The effective rate for the three and nine months ended September 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.

Our effective income tax rate was (29.8)% and 18.6% for the three and nine months ended September 30, 2025, respectively. The effective rate for the three and nine months ended September 30, 2025 differed from our federal statutory rate of 21% primarily due to the tax impact from the valuation allowance for activity in 2025 which included the acquisition of Previse, state income taxes and the non-deductibility of other permanent items.

We were under audit by the IRS for fiscal year 2023. In September 2026, the IRS issued its report of examination changes, which included an adjustment that we agreed to. The adjustment did not have a material effect on our financial position, results of operations, or cash flows.

For the three months ended September 30, 2026, we recorded approximately $1.4 million in unrecognized tax benefits related to research and development tax credits, which is presented as a reduction to the related deferred tax asset. Because we maintain a full valuation allowance against our net deferred tax assets, this adjustment was offset by a corresponding reduction in the valuation allowance and had no impact on the effective tax rate for the period.

15. 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

The measures of segment profit or loss for our single reportable segment were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Net revenues from external customers(1)	$	102,891	$	83,043	$	290,116	$	257,219

Significant segment expenses:
Personnel costs	60,877		52,863		179,593		156,614
Organizational and marketing costs	14,503		11,267		46,126		39,983
Inventory usage	7,690		6,127		22,577		16,316
Clinical studies and publication costs	2,066		2,183		6,711		6,191
Professional services	2,551		2,524		8,227		8,398
Other segment items	19,304		8,580		47,564		51,543
Segment loss	$	(4,100)	$	(501)	$	(20,682)	$	(21,826)

(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, administrative costs, expense for use of prepaids, including insurance premiums and warranties for lab equipment, public company costs (less audit fees), interest and other non-operating loss or income, and income tax expense or benefits. Our CODM does not individually review budgets or results for these activities.

Other amounts included in the measure of segment profit or loss were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Interest income	$	2,512	$	2,833	$	7,413	$	8,876
Interest expense	(197)		(24)		(524)		(62)
Depreciation and amortization	4,179		3,816		12,178		36,994
Income tax expense (benefit)	298		115		777		(4,974)
Stock-based compensation expense	11,232		12,100		32,597		34,487
Net (losses) gains on equity securities	(3,425)		3,561		(2,033)		3,321

Total assets for our reportable segment were located in the U.S. and were $579.4 million and $578.6 million as of September 30, 2026 and December 31, 2025, respectively. Expenditures for additions to long-lived assets were $8.9 million and $12.5 million for the three months ended September 30, 2026 and 2025, respectively, and $19.7 million and $31.1 million for the nine months ended September 30, 2026, and 2025, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes and other financial information included in this Quarterly Report on Form 10-Q with our audited financial statements and notes thereto as of and for the years ended December 31, 2025, and 2024 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, including the section entitled “Critical Accounting Estimates,” included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 10-K”), as filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2026. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us” and “our” refer to Castle Biosciences, Inc.

Forward-Looking Statements

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipate,” “believe,” “could”, “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “project,” “will,” “would” or the negative or plural of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions or expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in the 2025 10-K, Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements, except as may be required by law.

Overview

Castle Biosciences, Inc. is a molecular diagnostics company offering innovative test solutions to aid clinicians in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus (“BE”), atopic dermatitis (“AD”), and uveal melanoma (“UM”).

Our Test Portfolio

We currently offer six commercially available proprietary multi-analyte assays with algorithmic analysis (“MAAA”) tests for use in the fields of dermatology, gastroenterology, ophthalmology, and most recently includes a test to guide systemic treatment decisions in moderate-to-severe AD.

Our revenue is primarily generated by our DecisionDx-Melanoma risk stratification test for cutaneous melanoma (“CM”) and our TissueCypher risk stratification test for BE.

All of our MAAA tests, excluding our recently launched AdvanceAD-Tx test and Esopredict, have been granted Advanced Diagnostic Laboratory Test (“ADLT”) status by the Centers for Medicare and Medicaid (“CMS”) which means each test has demonstrated that (i) when combined with an empirically derived algorithm, it yields a result that predicts the probability a specific individual patient will develop a certain condition or conditions, or will respond to a particular therapy or therapies; and (ii) it provides new clinical diagnostic information that cannot be obtained from any other test or combination of tests. We believe this designation not only demonstrates our focus on developing and validating innovative tests but also enables our Medicare reimbursement rate to be set, over the long term, by the median private payor rate, which we believe provides a fair exchange of value. Further information about Medicare coverage and ADLT status with respect to each of our tests is set forth below.

Test Overview

Our Dermatology Tests

DecisionDx-Melanoma is our proprietary risk stratification gene expression profile (“GEP”) test designed to predict the likelihood of a positive sentinel lymph node and the risk of metastasis or recurrence for patients diagnosed with invasive CM. In a typical year, we estimate that approximately 130,000 patients are diagnosed with invasive CM in the U.S., representing an estimated U.S. total addressable market (“TAM”) of approximately $540 million. We estimate that approximately 50% of patients diagnosed with CM are 65 years of age or older.

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AdvanceAD-Tx is a non-invasive GEP test designed to guide systemic treatment selection for patients aged 12 years and older with moderate-to-severe AD. The test evaluates the expression of 487 genes across 12 known immune, inflammatory and skin-related pathways to identify the underlying biology driving an individual patient’s disease. Results classify patients into one of two molecular profiles: Janus Kinase (“JAK”) Inhibitor Responder Profile or T helper 2 (“Th2”) Molecular Profile. Using multiple data sources focused on one-year prevalence, we estimate that there are approximately 10 million individuals ages 12 and older in the U.S. with moderate-to-severe AD, representing an estimated U.S. TAM of approximately $33 billion. We commenced a limited access launch of the AdvanceAD-Tx test in November 2025.

DecisionDx-SCC is our proprietary GEP test for use in patients with SCC with one or more risk factors (also referred to as “high-risk” SCC) that both predicts the risk of metastasis as well as response to adjuvant radiation therapy. We estimate 20% of SCC patients, or approximately 200,000 annually in the U.S., are classified as high risk, representing an estimated U.S. TAM of approximately $820 million.

MyPath Melanoma is our proprietary, diagnostic GEP test for use in patients with difficult-to-diagnose melanocytic lesions. Of the 2 million suspicious pigmented lesions biopsied annually in the U.S., we estimate that approximately 300,000 of those present a difficult-to-diagnose melanocytic lesion, representing an estimated U.S. TAM of approximately $600 million.

Our Gastroenterology Tests

TissueCypher is our proprietary risk stratification spatialomics test designed to predict future development of high-grade dysplasia (“HGD”) and/or esophageal cancer in patients with non-dysplastic (“ND”), indefinite dysplasia (“IND”) or low-grade dysplasia (“LGD”) BE. We estimate a U.S. TAM of approximately $1 billion. In May 2025, we expanded our BE capabilities through the acquisition of Capsulomics, Inc., d/b/a Previse (“Previse”), which includes methylation-based intellectual property and the Esopredict risk-stratification test. We expect these assets to support the future development of TissueCypher and enable the potential incorporation of additional molecular modalities. Beginning in the first quarter of 2026, we began offering Esopredict as a supplemental option when TissueCypher does not produce an actionable result.

Our Ophthalmology Test

DecisionDx-UM is our proprietary, risk stratification GEP test that predicts the risk of metastasis for patients with UM. We believe DecisionDx-UM is the standard of care in the management of newly diagnosed UM in the majority of ocular oncology practices in the United States. We estimate a U.S. TAM of approximately $10 million.

Laboratory Operations

In third quarter of 2026, we opened a new laboratory and office facility in Scottsdale, Arizona. The facility, which is approximately 55,000 square feet, is Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certified, College of American Pathologists (“CAP”) accredited, and New York State approved, and performs testing and reporting for certain of our dermatology and gastroenterology tests. Our existing Phoenix, Arizona laboratory continues to operate as a backup laboratory.

Reimbursement

The primary source of revenue for our products is reimbursement from third-party payors, which includes government payors, such as Medicare, and commercial payors, such as insurance companies. Achieving broad coverage and reimbursement of our current products by third-party payors and continued Medicare coverage are key components of our financial success.

We bill third-party payors and patients for the tests we perform. We have Medicare coverage for our DecisionDx-Melanoma, TissueCypher, MyPath Melanoma, DecisionDx-UM and Esopredict tests which meet certain criteria for Medicare and Medicare Advantage beneficiaries. DecisionDx-SCC previously received Medicare coverage, which was subsequently impacted by LCD changes finalized in 2025.

Medicare claims are administered by the Medicare Administrative Contractor (“MAC”) for the jurisdiction of the laboratory that reports the test. Noridian is the MAC responsible for administering Medicare claims for test reports issued by our Scottsdale and Phoenix, Arizona laboratories (together, our “Arizona Laboratories”), and Novitas is the MAC responsible for administering Medicare claims for test reports issued by our Pittsburgh, Pennsylvania laboratory. Palmetto’s MolDX program (“MolDX”) oversees MAAA tests reported from our Arizona Laboratories.

The Medicare rates discussed below are prior to giving effect to applicable sequestration in effect from time to time as described in further detail under “Government Regulation and Product Approval—Healthcare Reform” included in Item 1, Business, of the 2025 10-K.

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DecisionDx-Melanoma

DecisionDx-Melanoma tests are reported out of our Arizona Laboratories and since the second quarter of 2022, have been covered under “foundational” local coverage determinations (“LCD” or “LCDs”) finalized by Palmetto and Noridian.

CMS reviewed and approved DecisionDx-Melanoma for ADLT status in 2019. Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2026 was set using median private payor rate data from January 1, 2024 to June 30, 2024. Our rate for 2024 and 2025 was $7,193 per test and remains $7,193 per test for 2026.

TissueCypher

Our TissueCypher tests are reported out of our Pittsburgh and Arizona laboratories. CMS reviewed and approved TissueCypher for ADLT status in 2022. Effective January 1, 2023, the published Clinical Laboratory Fee Schedule (“CLFS”) rate for TissueCypher was set at $4,950 per test and remained effective through December 31, 2024. This rate was based on the median private payor rates received between April 1, 2022 and August 31, 2022. Beginning with 2025, the rate for TissueCypher has been set annually based on the median private payor rate for the first half of the second preceding calendar year. The rate for 2026 was set using median private payor rate data from January 1, 2024 to June 30, 2024. Our rate for 2025 was $4,950 per test and remains $4,950 per test for 2026.

Esopredict

Our Esopredict tests are reported out of our Pittsburgh laboratory. Esopredict was granted a PLA CPT code prior to our May 2025 acquisition of Previse. The CLFS rate for Esopredict for 2026 is $1,755 per test.

DecisionDx-SCC

Our DecisionDx-SCC tests are reported out of our Pittsburgh and Arizona laboratories. CMS reviewed and approved DecisionDx-SCC for ADLT status in 2023. Effective July 1, 2023 and through March 31, 2024, CMS set the initial period rate equal to the list price of $8,500 per test. Effective April 1, 2024, we continued receiving reimbursement at a rate of $8,500 per test, set by CMS using median private payor rate data for the period July 1, 2023 and November 30, 2023, and this rate remained effective through December 31, 2025. Our rate for 2025 was $8,500 per test and remains $8,500 per test for 2026.

Palmetto and Noridian finalized an LCD recommending no coverage for DecisionDx-SCC with an effective date of August 18, 2024. Novitas finalized an oncology biomarker LCD, Genetic Testing for Oncology: Specific Tests, which also lists DecisionDx-SCC as non-covered; that LCD became effective on April 24, 2025.

In July 2025, we submitted reconsideration requests for both the Novitas and MolDX LCDs. Both Novitas and MolDX subsequently confirmed that our requests were valid. These confirmations represent an important procedural step in the reconsideration process, but they do not indicate coverage or a favorable review outcome.

MyPath Melanoma

Our MyPath Melanoma tests are reported out of our Arizona Laboratories. MyPath Melanoma was covered under a test-specific LCD policy through Noridian that became effective in June 2019. Effective August 6, 2023, Palmetto and Noridian issued LCDs that converted the test-specific MyPath Melanoma LCD to a “foundational” LCD and provided coverage for MyPath Melanoma.

CMS reviewed and approved MyPath for ADLT status in 2019. Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2026 was set using median private payor rate data from January 1, 2024 to June 30, 2024. Our rate for 2024 and 2025 was $1,950 per test and remains $1,950 per test for 2026.

DecisionDx-UM

DecisionDx-UM tests are reported out of our Arizona laboratories and are covered under LCDs finalized by MAC administrators Palmetto and Noridian in July 2017.

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CMS reviewed and approved DecisionDx-UM for ADLT status in 2019. Our rate is set annually based upon the median private payor rate for the first half of the second preceding calendar year. For example, the rate for 2026 was set using median private payor rate data from January 1, 2024 to June 30, 2024. Our rate for 2024 and 2025 was $7,776 per test and remains $7,776 per test for 2026.

AdvanceAD-Tx

Our AdvanceAD-Tx tests are reported out of our Pittsburgh laboratory. AdvanceAD-Tx was granted a PLA CPT code effective the beginning of July 2026 and is currently going through the CMS Clinical Laboratory Fee Schedule Annual Payment Determination Process.

Delivered Test Reports

The number of test reports we deliver is a key indicator that we use to assess our business. A test report is generated when we receive a sample in our laboratory, and then the relevant test information is entered into our Laboratory Information Management System, the laboratory portion of the test is performed, including proprietary algorithmic analysis of the combined biomarkers, and a report is then delivered to the clinician who ordered the test.

The number of test reports delivered by us are presented in the table below:


	Nine Months Ended September 30, 2026
	Q1	Q2	Q3	Total
DecisionDx-Melanoma	10,021	10,280	10,177	30,478
DecisionDx-SCC(3)	3,702	4,011	3,882	11,595
MyPath Melanoma	973	1,061	798	2,832
AdvanceAD-Tx(1)	589	850	1,109	2,548
Dermatologic Total	15,285	16,202	15,966	47,453
TissueCypher	11,745	14,988	15,574	42,307
DecisionDx-UM	492	482	422	1,396
Esopredict(2)	129	388	469	986

Grand Total	27,651	32,060	32,431	92,142

(1)We began offering the AdvanceAD-Tx test through a limited access launch in November 2025.

(2)We began offering the Esopredict test in the first quarter of 2026 as a supplemental option when TissueCypher does not produce an actionable result.

(3)Beginning in the third quarter of 2025, we substantially reduced our promotional focus on the DecisionDx-SCC test, which remains available to clinicians upon request.


	Nine Months Ended September 30, 2025
	Q1	Q2	Q3	Total
DecisionDx-Melanoma	8,621	9,981	10,459	29,061
DecisionDx-SCC	4,375	4,762	4,186	13,323
MyPath Melanoma	926	1,166	1,151	3,243
Dermatologic Total	13,922	15,909	15,796	45,627
TissueCypher	7,432	9,170	10,609	27,211
DecisionDx-UM	470	468	436	1,374
IDgenetix(1)	2,578	1,027	—	3,605
Grand Total	24,402	26,574	26,841	77,817

(1)The IDgenetix test was discontinued effective May 2025.

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For the three and nine months ended September 30, 2026, our test report volume increased by 21% and 18%, respectively, compared to the same periods in 2025. The increase primarily reflects continued growth in our core revenue drivers, DecisionDx-Melanoma and TissueCypher, whose combined test report volume increased by 22% and 29% for the three and nine months ended September 30, 2026, respectively, reflecting continued commercial adoption. We continue to invest in expanding our Pittsburgh laboratory operations to increase TissueCypher testing capacity and support future growth. For a discussion of how we recognize revenue derived from our tests, refer to “Components of Results of Operations—Net Revenues” below.

For our AdvanceAD-Tx product line, we plan to continue expanding availability in a phased manner throughout the remainder of 2026.

For our DecisionDx-SCC product line, we continue to see opportunities for leverage, where many of the clinicians ordering our DecisionDx-Melanoma are the same clinicians who order our DecisionDx-SCC test. During the nine months ended September 30, 2026, approximately 75% of all clinicians ordering DecisionDx-SCC had also ordered our DecisionDx-Melanoma test during that same period.

Information About Certain Metrics

The following provides additional information about certain metrics we have disclosed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Test Reports Delivered

Test reports delivered represent the number of completed test reports delivered by us during the reporting period indicated. The period in which a test report is delivered does not necessarily correspond with the period in which the related revenue, if any, is recognized, due to the timing and amount of adjustments for variable consideration under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). We use this metric to evaluate the growth in adoption of our tests and to measure against our internal performance objectives. We believe this metric is useful to investors in evaluating the volume of our business activity from period-to-period that may not be discernible from our reported revenues under ASC 606.

Other Events

Impact of Macroeconomic Conditions

Macroeconomic conditions, including uncertainties associated with the ongoing conflicts in the Middle East, including the conflict between the U.S., Iran, and Israel, the ongoing conflict between Ukraine and Russia and related sanctions, economic slowdowns, recent shutdowns of the federal government including regulatory agencies, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, persistent inflation and elevated energy prices, monetary policy shifts, current or proposed international tariffs, trade restrictions and retaliatory trade measures, cybersecurity threats, liquidity concerns at, and potential failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets and other evolving macroeconomic developments, continue to have direct and indirect impacts on our business and could in the future materially impact our results of operations and financial condition. We continue to actively monitor the impact of these macroeconomic factors on our results of operations, financial condition and cash flows. The extent of the impact of these factors on our operational performance and financial condition, including our ability to execute our business strategies and initiatives in the expected timeframe, will depend on future developments, which are uncertain and cannot be predicted; however, any continued or renewed disruption resulting from these factors could negatively impact our business.

Our Financial Results

Our net loss may fluctuate significantly from period to period, depending on the timing of our planned development activities, the growth of our sales and marketing activities and the timing of revenue recognition under ASC 606. We expect our expenses will increase substantially over time as we:

•execute clinical studies to generate evidence supporting our current and future product candidates;

•execute our commercialization strategy for our current and future commercial products;

•continue our ongoing and planned development of new products in our pipeline;

•seek to discover and develop additional product candidates;

•hire additional scientific and research and development (“R&D”) staff;

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•add additional operational, financial and management information systems and personnel; and

•make additional capital expenditures to support business growth and sustain existing operations.

Factors Affecting Our Performance

We believe there are several important factors that have impacted, and that we expect will continue to impact, our operating performance and results of operations, including:

•Report volume. We believe that the number of reports we deliver to clinicians is an important indicator of the growth of adoption among the healthcare provider community. Our revenue and costs are affected by the volume of testing and mix of customers. Our performance depends on our ability to retain and broaden adoption with existing prescribing clinicians, as well as attract new clinicians. Our report volume could be negatively impacted by developments related to evolving macroeconomic developments, as discussed above.

•Reimbursement. We believe that expanding reimbursement is an important indicator of the value of our products. Payors require extensive evidence of clinical utility, clinical validity, patient outcomes and health economic benefits in order to provide reimbursement for diagnostic products. Our revenue depends on our ability to demonstrate the value of our products to these payors.

•Gross margin. We believe that our gross margin is an important indicator of the operating performance of our business. Higher gross margins reflect the average selling price of our tests, as well as the operating efficiency of our laboratory operations.

•Expansion of our sales force and marketing programs. We believe the expansion of our direct sales force and marketing organization to educate clinicians and pathologists on the value of our molecular testing products will significantly impact our performance.

•Integrating acquisitions. Revenue growth, operational results and advances to our business strategy depend on our ability to integrate any acquisitions into our existing business and effectively scale their operations. The integration of acquired assets may impact our revenue growth, increase the cost of operations or may require management resources that otherwise would be available for ongoing development of our existing business.

•New product development. A significant aspect of our business is our investment in R&D activities, including activities related to the development of new products. In addition to the development of new product candidates, we believe these studies are critical to gaining clinician adoption of new products and driving favorable coverage decisions by payors for such products.

Components of the Results of Operations

Net Revenues

We generate revenues from the sale of our products. Currently, our revenues are primarily derived from the sale of DecisionDx-Melanoma, TissueCypher, and DecisionDx-SCC. We bill third-party payors and patients for the tests we perform.

Under ASC 606, we recognize revenue at the amount we expect to be entitled, subject to a constraint for variable consideration, in the period in which our tests are delivered to the treating clinicians. We have determined that our contracts contain variable consideration under ASC 606 because the amounts paid by third-party payors may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions. Variable consideration is recognized only to the extent it is probable that a significant reversal of revenue will not occur in future periods when the uncertainties are resolved. Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues. Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time. For these fully constrained claims, we generally recognize revenue in the period the uncertainty is favorably resolved, if at all. Due to potential future changes in Medicare coverage policies and appeal cycles, insurance coverage policies, contractual rates and other trends in the reimbursement of our tests, our revenues may fluctuate significantly from period to period. Our ability to recognize revenue for a test is dependent on the development of reimbursement experience and obtaining coverage decisions. For tests with limited reimbursement experience or no coverage, we recognize revenues on the basis of actual cash collections.

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Our ability to increase our revenues will depend on our ability to further penetrate our target markets, and, in particular, generate sales through our direct sales force, maintain Medicare coverage for our currently marketed products, develop and commercialize additional tests, including through acquisitions, obtain reimbursement from additional third-party payors and increase our reimbursement rate for tests performed.

Cost of Sales (exclusive of amortization of acquired intangible assets)

The components of our cost of sales are material and service costs associated with testing samples, personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), electronic medical record set up costs, order and delivery systems, shipping charges to transport samples, third-party test fees, and allocated overhead including rent, information technology costs, equipment and facilities depreciation and utilities. Costs associated with testing samples are recorded when the test is processed regardless of whether and when revenues are recognized with respect to that test. As a result, our cost of sales as a percentage of revenues may vary significantly from period to period because we do not recognize all revenues in the period in which the associated costs are incurred. We expect cost of sales in absolute dollars to increase as the number of tests we perform increases. Additionally, we expect cost of sales to increase prior to our launching of new tests, or prior to our initiating significant commercial expansion efforts, as we ready our operations to support anticipated business growth, for example, continued investment in and expansion of our laboratory facilities.

Gross margin and gross margin percentage are key indicators we use to assess our business. See the table in “Results of Operations—Comparison of the Nine Months Ended September 30, 2026 and 2025” for details.

Research and Development

R&D expenses include costs incurred to develop our tests, collect clinical samples and conduct clinical studies to develop and support our products. These costs consist of personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), prototype materials, laboratory supplies, consulting costs, regulatory costs, electronic medical records set up costs, costs associated with setting up and conducting clinical studies and allocated overhead, including rent, information technology, equipment depreciation and utilities. We expense all R&D costs in the periods in which they are incurred. We expect our R&D expenses to increase in absolute dollars as we continue to invest in R&D activities related to developing enhanced and new products.

We expect to use a portion of our cash and cash equivalents and marketable investment securities to further support and accelerate our ongoing and future clinical studies and pipeline initiatives.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses include executive, selling and marketing, legal, finance and accounting, human resources and billing functions. These expenses consist of personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), direct marketing expenses, audit and legal expenses, consulting costs, payor outreach programs and allocated overhead, including rent, information technology, equipment depreciation, and utilities. Other administrative and professional services expenses within SG&A are expected to increase with the scale of our business, but selling and marketing-related expenses are expected to increase significantly, consistent with our growth strategy.

Amortization of Acquired Intangible Assets

Amortization of acquired intangible assets is primarily associated with developed technology obtained through acquisitions, such as our acquisitions of the Myriad MyPath Laboratory in May 2021, Cernostics in December 2021, and Previse in May 2025.

Interest Income

Interest income consists primarily of earnings on cash and cash equivalents, including money market funds, and short-term U.S. government obligations included in our marketable investment securities.

Net (Losses) Gains on Equity Securities

Net (losses) gains on equity securities are primarily attributable to realized and unrealized gains and losses on our equity securities which we present as marketable investment securities.

Interest Expense

Interest expense is primarily attributable to long-term debt and finance leases.

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Other Income (Expense)

Other income (expense) is primarily attributable to unrealized foreign currency losses and gains on our foreign currency-denominated investments and loan receivable, which are presented as marketable investment securities and other assets, respectively.

Income Tax Expense (Benefit)

Income tax expense consists primarily of income taxes related to federal and state jurisdictions in which we conduct business. We maintain a full valuation allowance for deferred tax assets including operating loss carryforwards and R&D credits and other tax credits.

As of December 31, 2025, we had federal NOL carryforwards of $134.8 million, of which $52.9 million will begin to expire in 2032 if not utilized to offset federal taxable income, and $81.9 million may be carried forward indefinitely. Also, as of December 31, 2025, we also had state NOL carryforwards of $113.0 million, which begin to expire in 2030 if not utilized to offset state taxable income.

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Results of Operations

Comparison of the Three Months Ended September 30, 2026 and 2025

The following table summarizes our results of operations for the periods indicated (in thousands, except percentages):


	Three Months Ended September 30,				Change
	2026		2025
	(unaudited)
NET REVENUES	$	102,891	$	83,043	$	19,848	23.9	%
OPERATING EXPENSES
Cost of sales (exclusive of amortization of acquired intangible assets)	23,919		18,704		5,215		27.9	%
Research and development	15,807		12,960		2,847		22.0	%
Selling, general and administrative	63,792		55,907		7,885		14.1	%
Amortization of acquired intangible assets	2,104		2,276		(172)		(7.6)	%
Total operating expenses, net	105,622		89,847		15,775		17.6	%
Operating loss	(2,731)		(6,804)		4,073		59.9	%
Interest income	2,512		2,833		(321)		(11.3)	%
Net (losses) gains on equity securities	(3,425)		3,561		(6,986)		NM
Interest expense	(197)		(24)		(173)		(720.8)	%
Other income	39		48		(9)		(18.8)	%
Loss before income taxes	(3,802)		(386)		(3,416)		NM
Income tax expense	298		115		183		159.1	%
Net loss	$	(4,100)	$	(501)	$	(3,599)	NM

NM = Not meaningful

Net Revenues

The following table provides a disaggregation of net revenues by type (in thousands):


	Three Months Ended September 30,
	2026		2025		Change
	(unaudited)
Dermatologic(1)	$	47,877	$	48,523	$	(646)
Non-Dermatologic(2)	55,014		34,520		20,494
Total net revenues	$	102,891	$	83,043	$	19,848

(1)Consists of DecisionDx-Melanoma, DecisionDx-SCC, MyPath Melanoma and AdvanceAD-Tx.

(2)Consists of TissueCypher, DecisionDx-UM, Esopredict and IDgenetix.

Net revenues for the three months ended September 30, 2026 increased by $19.8 million, or 23.9%, to $102.9 million compared to the three months ended September 30, 2025, primarily driven by a $20.5 million increase in revenue from our non-dermatologic tests, partially offset by a $0.6 million decrease in revenue from our dermatologic tests.

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The $20.5 million increase in net revenues from our non-dermatologic tests was primarily attributable to a 47% increase in test report volumes for our TissueCypher Barrett’s Esophagus test and, to a lesser extent, a higher realized average selling price (“ASP”). The increases in our TissueCypher Barrett’s Esophagus test report volumes reflect growth through our sales force efforts. Net revenues from our non-dermatologic tests as a percentage of total net revenue increased from 41.6% for the three months ended September 30, 2025 to 53.5% for the three months ended September 30, 2026.

The $0.6 million decrease in net revenues for our dermatologic tests was primarily attributable to our DecisionDx-SCC test, driven by lower realized ASP and lower test report volumes. The reduction was primarily driven by the loss of Medicare coverage effective April 24, 2025 and the refocusing of our commercial efforts that followed.

Cost of Sales (exclusive of amortization of acquired intangible assets)

Cost of sales (exclusive of amortization of acquired intangible assets) for the three months ended September 30, 2026 increased by $5.2 million, or 27.9%, compared to the three months ended September 30, 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 adjustment for existing employees.

Due to the nature of our business, a significant portion of our cost of sales expenses represents fixed costs associated with our testing operations. Accordingly, our cost of sales will not necessarily increase or decrease commensurately with the change in net revenues from period to period. We expect our cost of sales (exclusive of amortization of acquired intangible assets) to continue to increase in future periods as we hire additional laboratory personnel and invest in related resources to support our expected operational growth and higher test volumes.

Gross Margin

The following table presents the calculation of gross margin (in thousands, except percentages):


	Three Months Ended September 30,
	2026			2025			Change
	(unaudited)
Net revenues	$	102,891		$	83,043		$	19,848
Less: Cost of sales (exclusive of amortization of acquired intangible assets)	23,919			18,704			5,215
Less: Amortization of acquired intangible assets	2,104			2,276			(172)
Gross margin	$	76,868		$	62,063		$	14,805
Gross margin percentage	74.7		%	74.7		%	—		%

Our gross margin percentage remained consistent at 74.7% for the three months ended September 30, 2026 compared to the same period in 2025. The consistent margin primarily reflects lower amortization of acquired intangible assets, which offset higher personnel costs, higher expenses for lab supplies and higher lab services costs reflecting increased test report volumes.

Research and Development

R&D expenses increased by $2.8 million, or 22.0%, for the three months ended September 30, 2026, compared to the three months ended September 30, 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.

We expect to continue incurring R&D expenses through our continued investments in our ongoing pipeline initiatives and as we seek opportunities to build evidentiary support for our current tests.

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Selling, General and Administrative

The following table provides a breakdown of SG&A expenses (in thousands):


	Three Months Ended September 30,
	2026		2025		Change
	(unaudited)
Sales and marketing	$	37,675	$	32,785	$	4,890
General and administrative	26,117		23,122		2,995
Total selling, general and administrative expense	$	63,792	$	55,907	$	7,885

Sales and marketing expenses increased by $4.9 million, or 14.9%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, primarily due to 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 adjustment for existing employees. Stock-based compensation expense included in sales and marketing was $4.1 million for the three months ended September 30, 2026 and $3.9 million for the three months ended September 30, 2025.

General and administrative expenses increased by $3.0 million, or 13.0%, for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The increase is primarily due 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 adjustment for existing employees. Stock-based compensation expense included in general and administrative expense was $4.1 million for the three months ended September 30, 2026, compared to $4.8 million for the three months ended September 30, 2025.

Net (Losses) Gains on Equity Securities

Net (losses) gains on equity securities decreased by $7.0 million for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. The decrease was primarily due to the absence of unrealized gains of $3.7 million recognized on other equity securities during the prior-year period, as those securities were subsequently sold and were no longer held during the three months ended September 30, 2026. The decrease also reflected a $3.4 million unrealized loss recognized on our equity investment in SciBase during the current-year period, compared to a $0.1 million unrealized loss in the prior-year period, primarily due to a decline in SciBase’s share price.

Stock-Based Compensation Expense

The following table indicates the amount of stock-based compensation expense (non-cash) included in the condensed consolidated statements of operations (in thousands):


	Three Months Ended September 30,
	2026		2025		Change
	(unaudited)
Cost of sales (exclusive of amortization of acquired intangible assets)	$	1,403	$	1,446	$	(43)
Research and development	1,611		1,950		(339)
Selling, general and administrative	8,218		8,704		(486)
Total stock-based compensation expense	$	11,232	$	12,100	$	(868)

Stock-based compensation expense which is allocated among cost of sales, R&D expense and SG&A expense totaled $11.2 million and $12.1 million for the three months ended September 30, 2026 and 2025, respectively. We expect stock-based compensation expense will continue to be material in future periods, attributable to both existing awards outstanding and anticipated additional grants to our current and future employees. As of September 30, 2026, we had 1,048 employees, compared to 823 as of September 30, 2025. As of September 30, 2026, the total unrecognized stock-based compensation cost related to outstanding awards was $80.4 million, which is expected to be recognized over a weighted-average period of 2.6 years.

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Comparison of the Nine Months Ended September 30, 2026 and 2025

The following table summarizes our results of operations for the periods indicated (in thousands, except percentages):


	Nine Months Ended September 30,				Change
	2026		2025
	(unaudited)
NET REVENUES	$	290,116	$	257,219	$	32,897	12.8	%
OPERATING EXPENSES
Cost of sales (exclusive of amortization of acquired intangible assets)	68,152		52,713		15,439		29.3	%
Research and development	44,778		38,335		6,443		16.8	%
Selling, general and administrative	194,813		172,592		22,221		12.9	%
Amortization of acquired intangible assets	6,581		32,562		(25,981)		(79.8)	%
Total operating expenses, net	314,324		296,202		18,122		6.1	%
Operating loss	(24,208)		(38,983)		14,775		37.9	%
Interest income	7,413		8,876		(1,463)		(16.5)	%
Net (losses) gains on equity securities	(2,033)		3,321		(5,354)		NM
Interest expense	(524)		(62)		(462)		(745.2)	%
Other (expense) income	(553)		48		(601)		NM
Loss before income taxes	(19,905)		(26,800)		6,895		25.7	%
Income tax expense (benefit)	777		(4,974)		5,751		115.6	%
Net loss	$	(20,682)	$	(21,826)	$	1,144	5.2	%

NM = Not meaningful

Net Revenues

The following table provides a disaggregation of net revenues by type (in thousands):


	Nine Months Ended September 30,
	2026		2025		Change
	(unaudited)
Dermatologic(1)	$	137,686	$	167,782	$	(30,096)
Non-Dermatologic(2)	152,430		89,437		62,993
Total net revenues	$	290,116	$	257,219	$	32,897

(1)Consists of DecisionDx-Melanoma, DecisionDx-SCC, MyPath Melanoma and AdvanceAD-Tx.

(2)Consists of TissueCypher, DecisionDx-UM, Esopredict and IDgenetix.

Net revenues for the nine months ended September 30, 2026 increased by $32.9 million, or 12.8%, to $290.1 million compared to the nine months ended September 30, 2025, primarily driven by a $63.0 million increase in revenue from our non-dermatologic tests, partially offset by a $30.1 million decrease in revenue from our dermatologic tests.

The $63.0 million increase in revenues from our non-dermatologic tests was primarily attributable to a 55% increase in test report volumes for our TissueCypher Barrett’s Esophagus test, and, to a much lesser extent, a higher realized ASP. The increase in TissueCypher Barrett’s Esophagus test report volumes reflects continued growth driven by our sales force efforts. Net revenues from our non-dermatologic tests as a percentage of total net revenues increased from 34.8% for the nine months ended September 30, 2025 to 52.5% for the nine months ended September 30, 2026.

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The $30.1 million decrease in net revenues for our dermatologic tests was primarily attributable to our DecisionDx-SCC test, driven by lower realized ASP and lower test report volumes. The reduction was primarily driven by the loss of Medicare coverage effective April 24, 2025 and the refocusing of our commercial efforts that followed. The decrease was partially offset by higher DecisionDx-Melanoma revenues, which were primarily driven by a 5% increase in test report volumes and, to a lesser extent, a higher realized ASP.

Cost of Sales (exclusive of amortization of acquired intangible assets)

Cost of sales (exclusive of amortization of acquired intangible assets) for the nine months ended September 30, 2026 increased by $15.4 million, or 29.3%, compared to the nine months ended September 30, 2025, primarily due to higher expenses for lab supplies, higher personnel costs, higher lab services costs, and higher depreciation expense. The increase in expenses for lab supplies and lab services costs was driven by higher test report volumes. Increases in personnel costs reflect a higher headcount, due to additions made to support business growth in response to growing test report volumes, as well as merit and annual inflationary wage adjustment for existing employees. Higher lab services costs also reflect the expansion of our laboratory operations, while higher depreciation expense reflects continued investment in laboratory equipment and facilities.

Gross Margin

The following table presents the calculation of gross margin (in thousands, except percentages):


	Nine Months Ended September 30,
	2026			2025			Change
	(unaudited)
Net revenues	$	290,116		$	257,219		$	32,897
Less: Cost of sales (exclusive of amortization of acquired intangible assets)	68,152			52,713			15,439
Less: Amortization of acquired intangible assets	6,581			32,562			(25,981)
Gross margin	$	215,383		$	171,944		$	43,439
Gross margin percentage	74.2		%	66.8		%	7.4		%

Our gross margin percentage was 74.2% for the nine months ended September 30, 2026, compared to 66.8% for the nine months ended September 30, 2025. The increase was primarily driven by significantly lower amortization of acquired intangible assets. Amortization expense was elevated in the prior-year period due to accelerated amortization related to the IDgenetix test, which was fully amortized as of March 31, 2025 following the decision to discontinue IDgenetix, resulting in no amortization expense associated with this asset in the current period.

Research and Development

R&D expenses increased by $6.4 million, or 16.8%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to higher personnel costs, higher consulting expenses and higher clinical studies costs. The increases in personnel costs reflect a higher headcount to support continued business growth. Increases in consulting expenses and clinical studies costs reflect continued investment in our research and development initiatives, including pipeline products.

We expect to continue incurring R&D expenses through our continued investments in our ongoing pipeline initiatives and as we seek opportunities to build evidentiary support for our current tests.

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Selling, General and Administrative

The following table provides a breakdown of SG&A expenses (in thousands):


	Nine Months Ended September 30,
	2026		2025		Change
	(unaudited)
Sales and marketing	$	119,625	$	104,716	$	14,909
General and administrative	75,188		67,876		7,312
Total selling, general and administrative expense	$	194,813	$	172,592	$	22,221

Sales and marketing expenses increased by $14.9 million, or 14.2%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase is primarily due to higher personnel costs and higher sales related travel expenses. Increases in personnel costs reflect a higher headcount driven by sales force expansion as well as merit and annual inflationary wage adjustment for existing employees. Higher sales related travel expenses reflect increased field activity to support growing test report volumes. Stock-based compensation expense included in sales and marketing expense was $11.5 million for the nine months ended September 30, 2026, compared to $11.7 million for the nine months ended September 30, 2025.

General and administrative expenses increased by $7.3 million, or 10.8%, for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The increase is primarily due to higher personnel costs and higher information technology-related costs. Increases in personnel costs reflect headcount expansions in our administrative functions as well as merit and annual inflationary wage adjustment for existing employees. Stock-based compensation expense included in general and administrative expense was $12.3 million for the nine months ended September 30, 2026, compared to $12.6 million for the nine months ended September 30, 2025.

Amortization of Acquired Intangible Assets

Amortization expense decreased by approximately $26.0 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to our decision to discontinue the IDgenetix test offering beginning in May 2025. As a result of this decision, we revised the estimated useful life of the related developed technology intangible asset and fully amortized the remaining carrying value as of March 31, 2025. The decrease is partially offset by amortization of the developed technology intangible asset recognized in association with the Esopredict test following our acquisition of Previse in May 2025.

Interest Income

Interest income decreased by $1.5 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to lower premium amortization and discount accretion recognized on our marketable securities and lower interest earned on our money market funds and marketable securities.

Net (Losses) Gains on Equity Securities

Net (losses) gains on equity securities decreased by $5.4 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The decrease was primarily due to the absence of unrealized gains of $3.4 million recognized on other equity securities during the prior-year period, as those securities were subsequently sold during the current-year period, resulting in a $0.5 million realized loss. The decrease also reflected a $1.4 million larger unrealized loss recognized on our equity investment in SciBase during the current-year period, primarily due to a decline in SciBase’s share price in the third quarter of 2026.

Interest Expense

Interest expense increased by $0.5 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily because a larger portion of our borrowing costs was recognized as interest expense. During construction of our new headquarters, these costs were capitalized and included in the cost of the building. Once the headquarters was substantially completed and ready for use in February 2026, we began recognizing ongoing borrowing costs as interest expense.

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Other (Expense) Income

Other (expense) income increased by $0.6 million for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, primarily due to unrealized foreign currency losses on foreign currency-denominated assets. There were no comparable losses in the prior-year period.

Income Tax Expense (Benefit)

Income tax expense was $0.8 million for the nine months ended September 30, 2026 and primarily consisted of income taxes related to state jurisdictions in which we conduct business. Our income tax benefit was $5.0 million for the nine months ended September 30, 2025, primarily due to a reduction of the valuation allowance previously recorded against our federal deferred tax assets. The release resulted in a credit to income tax expense and was based on new deferred tax liabilities recognized upon consolidating Previse.

Stock-Based Compensation Expense

The following table indicates the amount of stock-based compensation expense (non-cash) included in the condensed consolidated statements of operations (in thousands):


	Nine Months Ended September 30,
	2026		2025		Change
	(unaudited)
Cost of sales (exclusive of amortization of acquired intangible assets)	$	4,080	$	4,324	$	(244)
Research and development	4,732		5,807		(1,075)
Selling, general and administrative	23,785		24,356		(571)
Total stock-based compensation expense	$	32,597	$	34,487	$	(1,890)

Stock-based compensation expense, which is allocated among cost of sales, R&D expense and SG&A expense, totaled $32.6 million for the nine months ended September 30, 2026, compared to $34.5 million for the nine months ended September 30, 2025. The decrease was primarily attributable to higher fair value awards granted in prior periods having substantially vested, resulting in a lower mix of higher fair value awards in the current period.

We expect stock-based compensation expense will continue to be material in future periods, attributable to both existing awards outstanding and anticipated additional grants to our current and future employees. As of September 30, 2026, we had 1,048 employees compared to 823 as of September 30, 2025. As of September 30, 2026, the total unrecognized stock-based compensation cost related to outstanding awards was $80.4 million, which is expected to be recognized over a weighted-average period of 2.6 years.

Liquidity and Capital Resources

Sources of Liquidity

Our principal sources of liquidity are our cash and cash equivalents, marketable investment securities and cash generated from the sale of our products. All of our marketable investment securities are considered investment grade and are readily available for use in current operations. As of September 30, 2026 and December 31, 2025, we had marketable investment securities of $199.7 million and $182.8 million, respectively. Additionally, as of September 30, 2026 and December 31, 2025, we had cash and cash equivalents of $78.0 million and $116.7 million, respectively.

Our liquidity has been primarily derived from the revenue generated from the sale of our products. We believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our operations for at least the next 12 months. However, we have based these estimates on assumptions that may prove to be wrong, and could result in us depleting our capital resources sooner than expected.

As mentioned above, we expect to use a portion of our cash and cash equivalents and marketable investment securities to further support and accelerate our R&D activities, including the clinical studies noted above in “—Components of the Results of Operations—Research and Development.”

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Material Cash Requirements

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, clinical R&D services, laboratory operations, equipment and related supplies, legal and other regulatory expenses, general administrative costs and, from time to time, expansion of our laboratory and office facilities in support of our growth. We anticipate that a substantial portion of our cash requirements in the foreseeable future will relate to the further commercialization of our currently marketed products, the development of our future product candidates in our pipeline and the potential commercialization of these pipeline products, should their development be successful.

In February 2024, we purchased a plot of land in Friendswood, Texas and soon thereafter began development of the land and construction of a commercial office building which now serves as our corporate headquarters. Over the duration of this project, we incurred significant capital expenditures through payments to the developer under a percentage-of-completion basis. We completed the portions of the building that serve as our headquarters in February 2026, at which time we began occupying the building. Capital expenditures related to this development project were immaterial for the three months ended September 30, 2026 and $3.1 million during the nine months ended September 30, 2026, compared to $6.8 million and $20.8 million during the corresponding periods in 2025.

Since our inception, we have generally incurred significant losses and negative operating cash flows, and we have relied heavily on proceeds from our financing activities to fund capital expenditures, business expansion campaigns, and to offset operating deficits. For the year ended December 31, 2025, we recognized a net loss of $24.2 million, and generated positive operating cash flow of $64.3 million, however, we may be unable to sustain profitability and positive cash flows in future periods. Medicare coverage for our DecisionDx-SCC test was discontinued in April 2025, which reduced revenues and cash inflows from this test during 2025. We expect this impact to continue unless our reconsideration requests related to both the MolDX and Novitas LCDs are approved. Our ability to maintain profitability will heavily depend on us maintaining Medicare coverage for our currently marketed products, on the successful commercialization of the products we plan to launch in the future, and our ability to manage operating expenses. We expect to continue to incur expenses in the future as we invest in the commercialization of our existing products and the development and commercialization of our current pipeline products and future product candidates.

We believe that our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from the sale of our commercial products will be sufficient to fund our operations for at least the next 12 months. We believe we will meet longer-term expected cash requirements and obligations through a combination of existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products and issuances of equity securities or debt offerings. However, we have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. There are numerous risks and uncertainties associated with developing genomic tests, including, among others, the uncertainty of:

•successful commencement and completion of clinical study protocols;

•successful identification and acquisition of tissue samples;

•the development and validation of genomic classifiers; and

•acceptance of new genomic tests by clinicians, patients and third-party payors including competitor actions.

Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate our exact working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of, many factors, including those listed above as well as those listed in Part I, Item 1A, “Risk Factors” in the 2025 10-K, Part II, Item 1A, “Risk Factors” in our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2026 and June 30, 2026 and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the SEC.

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In the event additional funding is required, we expect that we would use a combination of equity and debt financings, which may not be available to us when needed, on terms that we deem to be favorable or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. Any disruptions to, or volatility in, the credit and financial markets or any deterioration in overall economic conditions may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we are unable to raise additional funds through debt or equity financing or other arrangements when needed, we may be required to delay, limit, reduce or terminate our product discovery and development activities or future commercialization efforts.

Long-Term Debt

Our long-term debt is presented in the table below (in thousands):


	September 30, 2026		December 31, 2025
	(unaudited)
Term debt	$	10,200	$	10,200
Unamortized discount	(116)		(143)
Total debt, net	10,084		10,057
Less: Current portion of long-term debt	(4,167)		(417)
Total long-term debt	$	5,917	$	9,640

2024 Loan and Security Agreement

On March 26, 2024 (the “Closing Date”), we entered into the 2024 LSA, as amended in April 2025, 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.

In addition, we are required to make a final payment equal to 2.00% of the aggregate original principal amounts of the 2024 Term Loan, due at maturity or upon full repayment.

2024 Term Loan

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Leases

We have entered into various operating and finance leases, which are primarily associated with our laboratory facilities and office space.

Total undiscounted future minimum payment obligations under our operating leases and finance leases as of September 30, 2026 totaled approximately $38.0 million, of which $0.7 million is payable through the remainder of 2026 and $37.3 million is payable through early 2037. The leases expire on various dates through 2037 and provide certain options to renew for additional periods. On March 19, 2026, we entered into a new lease agreement with an initial term of approximately 11 years for laboratory and office space located in Pittsburgh, Pennsylvania. As of September 30, 2026, the lease had not yet commenced. Upon commencement, we expect the leases to increase our undiscounted future minimum payment obligations by a total of approximately $7.7 million.

We expect our lease obligations may increase in the future as we expand our facilities, operations and headcount in support of the anticipated growth in our portfolio of commercial products and pipeline tests.

Cash Flows

The following table summarizes our sources and uses of cash and cash equivalents for each of the periods presented (in thousands):


	Nine Months Ended September 30,
		2026		2025
		(unaudited)
Net cash provided by operating activities		$	12,813	$	37,416
Net cash used in investing activities		(46,495)		(69,198)
Net cash used in financing activities		(5,053)		(2,371)
Net change in cash and cash equivalents		(38,735)		(34,153)
Cash and cash equivalents, beginning of period		116,729		119,709
Cash and cash equivalents, end of period		$	77,994	$	85,556

Operating Activities

Net cash provided by operating activities was $12.8 million for the nine months ended September 30, 2026. The net loss of $20.7 million includes non-cash charges of stock-based compensation expense of $32.6 million, depreciation and amortization of $12.2 million and net losses on equity securities of $2.0 million. Cash used as a result of changes in operating assets and liabilities was $13.1 million, primarily due to increases in prepaid expenses and other current assets of $8.8 million, increases in accounts receivable of $8.1 million, decreases in accrued compensation of $4.9 million, offset by increases in other accrued and current liabilities of $6.6 million and increases in accounts payable of $2.3 million.

Net cash provided by operating activities was $37.4 million for the nine months ended September 30, 2025. The net loss of $21.8 million includes depreciation and amortization of $37.0 million, non-cash stock-based compensation expense of $34.5 million, offset by increases in deferred income taxes of $5.3 million, accretion of discounts on marketable investment securities of $3.5 million, and net gains on equity securities of $3.3 million. Cash used as a result of changes in operating assets and liabilities was $0.4 million, primarily due to $4.5 million of prepaid expenses and other current assets and $1.1 million of operating lease liabilities, partially offset by an increase in accounts payable of $3.1 million, an increase of other accrued and current liabilities of $1.9 million, and $1.0 million increase in operating lease assets.

The $24.6 million decrease in net cash provided by operating activities for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to increases in operating expenditures and the timing of working capital changes, including higher payments of annual bonuses and employee benefits. Cash used during the nine months ended September 30, 2026 included $28.8 million of such payments, compared to $22.5 million in the prior-year period, and these payments are not expected to recur in the remainder of 2026.

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Investing Activities

Net cash used in investing activities was $46.5 million for the nine months ended September 30, 2026 and consisted primarily of purchases of marketable investment securities of $165.6 million, purchases of property and equipment of $28.6 million, partially offset by $138.8 million of proceeds from maturities of marketable investment securities, $5.6 million of proceeds from maturities of debt securities classified as held-to-maturity and $3.2 million of proceeds from the sale of equity securities.

Net cash used in investing activities was $69.2 million for the nine months ended September 30, 2025 and consisted primarily of purchases of marketable investment securities of $151.3 million, purchases of property and equipment of $28.8 million, our asset acquisition of Previse for $18.7 million and purchases of debt securities classified as held-to-maturity of $5.6 million, partially offset by the maturity of marketable investment securities of $135.2 million.

The $22.7 million decrease in cash used in investing activities for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, was primarily due to $18.7 million of acquisition related activity in the prior period with no comparable activity in the current period, $5.6 million of proceeds from held-to-maturity securities maturing in the current period which were purchased in the prior comparative period, and $3.2 million of proceeds from the sale of equity securities. These decreases were partially offset by $10.7 million in higher net purchases of marketable securities.

Financing Activities

Net cash used in financing activities was $5.1 million for the nine months ended September 30, 2026, and consisted primarily of $8.3 million of payments for employee taxes related to the vesting of restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”) and $1.0 million of payments related to contingent consideration, partially offset by $2.9 million of proceeds from contributions to our 2019 Employee Stock Purchase Plan (the “ESPP”) and $1.4 million of proceeds from exercise of common stock options.

Net cash used in financing activities was $2.4 million for the nine months ended September 30, 2025, and consisted primarily of the $4.3 million payment of employee taxes attributable to the vesting of RSUs, partially offset by the $1.7 million of proceeds from contributions to our ESPP.

Critical Accounting Estimates

During the nine months ended September 30, 2026, there were no significant changes to the information discussed under “Critical Accounting Estimates” included in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our 2025 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily relate to interest rate fluctuations. As of September 30, 2026, we had cash and cash equivalents of $78.0 million, consisting of bank deposits and money market funds. We had marketable investment securities of $199.7 million, primarily invested in U.S. government securities. Due to the nature of these instruments, we believe our exposure to interest rate risk is not material.

As of September 30, 2026, we had $10.1 million of outstanding term debt that bears interest at a floating rate based on the WSJ Prime Rate, subject to an interest rate floor of 6.00%. In September 2026, the U.S. Federal Reserve raised the target range for the federal funds rate by 25 basis points, and the WSJ Prime Rate subsequently increased by 25 basis points. Because the loan bears interest at a floating rate, changes in the WSJ Prime Rate affect our interest expense.

A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our financial statements.

Foreign Currency Risk

We are exposed to foreign currency exchange rate risk primarily related to a loan receivable and certain equity securities denominated in Swedish Krona (“SEK”). As of September 30, 2026, this loan had a principal balance of SEK 20 million and bears interest at a rate of 2.00% plus the three-month Stockholm Interbank Offered Rate. We do not currently hedge our foreign currency exposure. A hypothetical 10% change in foreign currency exchange rates

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would increase or decrease the value of our foreign currency-denominated assets by approximately $0.6 million, which we do not consider material to our financial statements.

Inflation Risk

Our exposure to inflationary pressures is primarily in personnel and related costs. The extent of any future impacts from inflation on our business and our results of operations will depend on the duration and severity of inflationary trends, which we are unable to predict. If inflationary pressures persist or increase, our operating expenses may rise and we may utilize our capital resources sooner than expected. Additionally, due to the reimbursement environment in which we operate, our payors may be unwilling or unable to adjust reimbursement rates to offset inflationary cost increases.

Equity Price Risk

As of September 30, 2026, we held equity securities with a total fair value of $4.4 million. A hypothetical 10% decrease in the market price of these securities would result in an approximate $0.4 million decrease in fair value. These securities are subject to market-related risks that could materially impact their value.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the third quarter of 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in legal proceedings arising in the ordinary course of business. Legal proceedings, including litigation, government investigations and enforcement actions could result in material costs, occupy significant management resources and entail civil and criminal penalties, even if we ultimately prevail. 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 government’s 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. This inquiry, and any potential resulting claim asserted against us, with or without merit, could be time-consuming, expensive to address and divert management’s attention and other resources. These claims also 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.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in the 2025 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in the 2025 10-K or our subsequent Quarterly Reports on Form 10-Q other than the updates to the risk factors or new risk factors set forth below.

We may disclose changes to risk factors or additional risk factors from time to time in our future filings with the SEC.

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Risks Related to Our Financial Condition

We incurred significant losses in the past, and we may be unable to achieve sustained profitability in the future.

Since our inception, we have had a history of net losses. For the year ended December 31, 2025, we had a net loss of $24.2 million, and as of December 31, 2025, we had an accumulated deficit of $224.3 million. For the nine months ended September 30, 2026, we had a net loss of $20.7 million, and as of September 30, 2026, we had an accumulated deficit of $245.0 million. We cannot predict if we will continue to achieve profitability in the future. We may incur losses in the future as we plan to invest significant additional funds toward the expansion of our commercial organization, the conduct of clinical utility and validity studies to support adoption of our products and the development or acquisition of additional products. We also expect increases in our stock-based compensation expense in future periods due to additional awards outstanding, attributable to increased headcount. Additionally, our performance could be affected by the impacts of geopolitical and macroeconomic developments, such as the ongoing conflicts in the Middle East, including the conflict between the U.S., Iran, and Israel, the ongoing conflict between Ukraine and Russia and related sanctions, economic slowdowns, recent shutdowns of the federal government including regulatory agencies, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, persistent inflation and elevated energy prices, monetary policy shifts, current or proposed international tariffs, trade restrictions and retaliatory trade measures, cybersecurity threats, liquidity concerns at, and potential failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets and other evolving macroeconomic developments. Due to the requirements associated with being a public company, we expect to continue incurring significant additional legal, accounting and other expenses. We also expect that any acquisitions of businesses, assets, products or technologies will increase our expenses. These increased expenses will make it harder for us to achieve future profitability or generate positive cash flows. Furthermore, our revenues from our DecisionDx-SCC test represented a lesser portion of our 2025 revenues compared to prior years following the discontinuance of Medicare reimbursement as of April 24, 2025, and we expect it will continue to be a smaller portion of our 2026 operating results. See “—Risks Related to Our Business—Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, TissueCypher, and DecisionDx-SCC tests, and we will need to generate sufficient revenue from these products and other products to grow our business.” We may also incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in the 2025 10-K, adoption of our products, coverage of and reimbursement rates for our products from third-party payors, and future research and development activities. Our failure to achieve profitability in the future could cause the market price of our common stock to decline and make it more difficult or costly for us to raise additional capital.

Risks Related to Our Business

Unfavorable U.S. and global economic conditions could adversely affect our business, financial condition, results of operations or cash flows.

Our results of operations could be adversely affected by general conditions in the U.S. and global economies, the financial markets and adverse macroeconomic developments. U.S. and global economic and financial conditions have been, and continue to be, disrupted and volatile due to many factors, including the ongoing conflicts in the Middle East, including the conflict between the U.S., Iran and Israel, the ongoing conflict between Ukraine and Russia and related sanctions, economic slowdowns, recent shutdowns of the federal government including regulatory agencies, public health crises, labor shortages, recessions or market corrections, supply chain disruptions, persistent inflation and elevated energy prices, monetary policy shifts, current or proposed international tariffs, trade restrictions and retaliatory trade measures, cybersecurity threats, liquidity concerns at, and potential failures of, banks and other financial institutions or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets or other evolving macroeconomic developments, among others. General business and economic conditions that could affect our business, financial condition or results of operations include fluctuations in economic growth, debt and equity capital markets, foreign currency exchange rates, liquidity of the global financial markets, changes in trade and tariff policies, the availability and cost of credit, investor and consumer confidence, and the strength of the economies in which we, our collaborators, our manufacturers and our suppliers operate.

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A severe or prolonged global economic downturn could result in a variety of risks to our business. For example, inflation rates, particularly in the U.S., have increased recently to levels not seen in years, and increased inflation has resulted in increased personnel costs and increased prices for certain lab supplies and may result in additional increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all. In addition, the U.S. Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks. Furthermore, the closures of specific financial institutions, or the broader financial services industry, may lead to market-wide liquidity shortages that could materially harm our business and financial condition. For example, closures of Silicon Valley Bank, Signature Bank and First Republic Bank in 2023 resulted in broader financial institution liquidity risk and concerns. The deposits and certain assets of these banks were subsequently acquired by First Citizens Bank, Flagstar Bank and JPMorgan Chase Bank, respectively. Additionally, rapid changes in U.S. trade policy, such as the imposition of additional tariffs and trade barriers, as well as potential retaliatory measures taken by other governments, could increase the price of and/or affect the availability of imported raw materials used in the production of our products.

Risks of a prolonged global economic downturn are particularly true in Europe, which is undergoing a continued severe economic crisis. A weak or declining economy could also strain our suppliers and manufacturers, possibly resulting in supply disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

Financial markets around the world are experiencing volatility following the conflict between the U.S. and Iran in February 2026 and the invasion of Ukraine by Russia in February 2022. As a result of the conflicts in the Middle East, the U.S., UK, Canada, Australia, Japan, South Korea, Israel, and the European Union have placed sanctions and export controls on Iran. Due to the escalation of the ongoing conflicts in the Middle East, including the conflict between the U.S., Iran, and Israel, the closure and risk of closure of the Strait of Hormuz has imposed significant constraints on global oil and energy transportation and production. Additionally, in response to the invasion of Ukraine, the U.S., UK and European Union, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future. The full economic and social impact of the sanctions imposed on Russia (as well as possible future punitive measures that may be implemented), as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia, which could conceivably expand into the surrounding region, remains uncertain; however, both the conflict and related sanctions have resulted and could continue to result in disruptions to trade, commerce, pricing stability, credit availability and/or supply chain continuity in both Europe and globally, and has introduced significant uncertainty into global markets. In particular, the Russia-Ukraine conflict has contributed to rapidly rising costs of living (driven largely by higher energy prices) in Europe and other advanced economies. More recently, the escalation of hostilities between Iran and Israel has introduced additional geopolitical instability and uncertainty, particularly in the Middle East. This conflict has the potential to disrupt global energy supplies, impact shipping routes, and lead to broader regional or international involvement, further straining global supply chains and financial markets. Further, a weak or declining economy could strain our suppliers, manufacturers and collaborators, possibly resulting in additional supply disruption for our product candidates. As a result, our business and results of operations may be adversely affected by the ongoing conflict between the U.S. and Iran and the conflict between Ukraine and Russia, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict. If economic conditions in Europe, the Middle East, or other key markets for our business and the business of our suppliers, manufacturers and collaborators remain uncertain or deteriorate further, we could experience adverse effects on our business, financial condition, results of operations or cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Use of Proceeds from IPO of Common Stock

On July 29, 2019, we completed our IPO, pursuant to which we issued and sold 4,600,000 shares of our common stock, including 600,000 shares associated with the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $16.00 per share.

The offer and sale of all of the shares of our common stock in the IPO were registered under the Securities Act pursuant to our Registration Statements on Form S-1, as amended (File Nos. 333-232369 and 333-232796), which were declared or became effective on July 24, 2019.

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There has been no material change in our planned use of the net proceeds from the IPO as described in the final prospectus filed with the SEC on July 26, 2019 relating to our Registration Statements on Form S-1 (File Nos. 333-232369 and 333-232796).

Since the effective date of our registration statement through September 30, 2026, we have not used any of the net proceeds from the IPO. Pending such uses, we have invested, and plan to continue to invest, the balance of the net proceeds from the IPO in cash and cash equivalent securities or highly liquid investment securities.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Insider Trading Arrangements

On September 14, 2026, Frank Stokes, our Chief Financial Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of up to 100% of the shares of our common stock issued upon the settlement of 50,854 shares of RSUs, less the number of shares withheld to cover tax withholding obligations in connection with the vesting and settlement of such RSUs. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The duration of the trading arrangement is estimated to be from December 14, 2026 until the earlier of all transactions under the trading arrangement being completed or December 15, 2027.

No other directors or officers, as defined in Rule 16a-1(f), adopted and/or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement, as defined in Regulation S-K Item 408, for the three months ended September 30, 2026.

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Item 6. Exhibits.


Exhibit Number						Description
3.1						Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on May 23, 2025.
3.2						Amended and Restated Bylaws of the Registrant, incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on August 8, 2025.
4.1						Form of Common Stock Certificate of the Registrant, incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-1 (File No. 333-232369), as amended, originally filed with the SEC on June 26, 2019.

31.1*						Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
31.2*						Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
32.1**						Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Exchange Act, and 18 U.S.C. Section 1350.
101.INS*						Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						Inline XBRL Taxonomy Extension Schema.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase.
104*						Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CASTLE BIOSCIENCES, INC.

Date:

November 5, 2026

By:

/s/ Derek J. Maetzold

Derek J. Maetzold
President and Chief Executive Officer
(Principal Executive Officer)

Date:

November 5, 2026

By:

/s/ Frank Stokes

Frank Stokes
Chief Financial Officer
(Principal Financial and Accounting Officer)