CASTLE BIOSCIENCES INC

Previous wording

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 atopic dermatitis.

Current wording

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.

Previous wording

All of our MAAA tests, excluding our recently launched AdvanceAD-Tx test, 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.

Current wording

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.

Previous wording

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 difficult-to-diagnose melanocytic lesion, representing an estimated U.S. TAM of approximately $600 million.

Current wording

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.

Previous wording

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. Revenue and test volume from Esopredict have not been material to date.

Current wording

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.

Previous wording

We bill third-party payors and patients for the tests we perform. We have received Medicare coverage for our DecisionDx-Melanoma, TissueCypher, MyPath Melanoma and DecisionDx-UM 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.

Current wording

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.

Previous wording

We issue our DecisionDx-SCC tests from our Pittsburgh and Phoenix laboratories. Palmetto’s MolDX (“MolDX”) program oversees MAAA tests that are reported from our Phoenix laboratory and Noridian is the MAC responsible for administering Medicare claims for test reports issued by our Phoenix laboratory. Novitas is the MAC responsible for administering Medicare claims for test reports issued by our Pittsburgh laboratory.

Current wording

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.

Previous wording

DecisionDx-Melanoma tests are processed from our Phoenix laboratory and since the second quarter of 2022, have been covered under “foundational” local coverage determinations (“LCD” or “LCDs”) finalized by Medicare Administrative Contractors (“MACs”) Palmetto and Noridian.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

On July 4, 2024, Palmetto and Noridian finalized an LCD recommending no coverage for DecisionDx-SCC with an effective date of August 18, 2024. On January 9, 2025, 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.

Current wording

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.

Previous wording

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 it does not indicate coverage or a favorable review outcome.

Current wording

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.

Previous wording

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.

Current wording

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.

Previous wording

DecisionDx-UM tests are processed from our Phoenix laboratory and are covered under LCDs finalized by MAC administrators Palmetto and Noridian in July 2017.

Current wording

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.

Previous wording

For the three and six months ended June 30, 2026, our test report volume increased by 16% and 13%, respectively, compared to the same periods in 2025. The increase primarily reflects continued growth in our core revenue drivers, TissueCypher and DecisionDx-Melanoma. TissueCypher test report volume increased by 63% and 61% for the three and six months ended June 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. DecisionDx-Melanoma test report volume increased by 3% and 9% for the three and six months ended June 30, 2026, respectively. Dermatologic test report volume decreased by 4% for the three months June 30, 2026 but increased by 1% for the six months ended June 30, 2026, primarily reflecting lower DecisionDx-SCC test report volume, partially offset by continued growth in DecisionDx-Melanoma. For a discussion of how we recognize revenue derived from our tests, refer to “Components of Results of Operations—Net Revenues” below.

Current wording

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.

Previous wording

For our AdvanceAD-Tx product line, we received approximately 1,000 and 1,650 orders during the three and six months ended June 30, 2026, respectively, while still in the initial limited access phase. We believe early adoption reflects clinician interest in integrating AdvanceAD-Tx into existing AD treatment pathways. We plan to expand availability in a phased manner throughout the remainder of 2026.

Current wording

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

Previous wording

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 six months ended June 30, 2026, approximately 68% of all clinicians ordering DecisionDx-SCC had also ordered our DecisionDx-Melanoma test during that same period.

Current wording

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.

Previous wording

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, inflation and 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.

Current wording

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.

Previous wording

Our net (loss) income 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:

Current wording

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:

Previous wording

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

Current wording

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.

Previous wording

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 Six Months Ended June 30, 2026 and 2025” for details.

Current wording

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.

Previous wording

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

Current wording

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.

Previous wording

Other loss 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.

Current wording

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.

Previous wording

Net revenues for the three months ended June 30, 2026 increased by $17.4 million, or 20.1%, to $103.5 million compared to the three months ended June 30, 2025, primarily driven by a $25.0 million increase in revenue from our non-dermatologic tests, partially offset by a $7.6 million decrease in revenue from our dermatologic tests.

Current wording

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.

Previous wording

The $25.0 million increase in net revenues from our non-dermatologic tests was primarily attributable to higher 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 revenue from our non-dermatologic tests as a percentage of total net revenue increased from 34.7% for the three months ended June 30, 2025 to 53.0% for the three months ended June 30, 2026.

Current wording

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.

Previous wording

The $7.6 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 in ASP was primarily driven by the loss of Medicare LCD coverage in April 2025.

Current wording

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.

Previous wording

Cost of sales (exclusive of amortization of acquired intangible assets) for the three months ended June 30, 2026 increased by $6.1 million, or 34.5%, compared to the three months ended June 30, 2025, primarily due to higher expenses for lab supplies, higher personnel costs, 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 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.

Current wording

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.

Previous wording

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 expenses will not necessarily increase or decrease commensurately with the change in net revenues from period to period. We expect our cost of sales expenses (exclusive of amortization of acquired intangible assets) to continue to increase in future periods as we hire additional laboratory personnel and related resources to support our expected operational growth and higher test volumes.

Current wording

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.

Previous wording

Our gross margin percentage was 74.9% for the three months ended June 30, 2026, compared to 77.3% for the same period in 2025. The decrease primarily reflects higher expenses for lab supplies, higher personnel costs and higher lab services costs reflecting the shift in the mix of reports issued partially offset by the spread of fixed laboratory costs over higher test report volumes.

Current wording

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.

Previous wording

R&D expenses increased by $1.8 million, or 13.7%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher personnel costs driven by increased headcount to support continued business growth, as well as increased advisory board, clinical trial, and travel costs related to our pipeline initiatives.

Current wording

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.

Previous wording

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 and new tests where commercial opportunities exist.

Current wording

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.

Previous wording

Sales and marketing expenses increased by $5.8 million, or 16.5%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to higher personnel costs, higher expenses associated with travel, and higher business admin costs. Stock-based compensation expense included in sales and marketing was $3.9 million for both the three months ended June 30, 2026 and the three months ended June 30, 2025.

Current wording

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.

Previous wording

General and administrative expenses increased by $2.3 million, or 9.9%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase is primarily due to 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 $4.6 million for the three months ended June 30, 2026, compared to $3.9 million for the three months ended June 30, 2025.

Current wording

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.

Previous wording

Net (losses) gains on equity securities decreased by $1.8 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease was primarily due to the absence of unrealized gains 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 June 30, 2026. The decrease also reflected an unrealized loss recognized on our equity investment in SciBase during the current-year period, which we did not hold during the prior-year period.

Current wording

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.

Previous wording

Stock-based compensation expense which is allocated among cost of sales, R&D expense and SG&A expense totaled $11.6 million and $11.2 million for the three months ended June 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 June 30, 2026, we had 1,002 employees, compared to 798 as of June 30, 2025. As of June 30, 2026, the total unrecognized stock-based compensation cost related to outstanding awards was $90.4 million, which is expected to be recognized over a weighted-average period of 2.7 years.

Current wording

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.

Previous wording

Net revenues for the six months ended June 30, 2026 increased by $13.0 million, or 7.5%, to $187.2 million compared to the six months ended June 30, 2025, primarily driven bya $42.5 million increase in revenue from our non-dermatologic tests, partially offset by a $29.5 million decrease in revenue from our dermatologic tests.

Current wording

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 bya $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.

Previous wording

The $42.5 million increase in revenues from our non-dermatologic tests was primarily attributable to a 61% increase in test report volumes for our TissueCypher test, and, to a much lesser extent, a higher realized ASP. The increase in TissueCypher 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 31.5% for the six months ended June 30, 2025 to 52.0% for the six months ended June 30, 2026.

Current wording

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.

Previous wording

The $29.5 million decrease in revenues from our dermatologic tests was primarily attributable to our DecisionDx-SCC test, driven by lower realized ASP and lower test report volumes following the loss of Medicare coverage effective April 24, 2025. The decrease was partially offset by higher DecisionDx-Melanoma revenues, which were primarily driven by a 9% increase in test report volumes and, to a lesser extent, a higher realized ASP.

Current wording

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.

Previous wording

Cost of sales (exclusive of amortization of acquired intangible assets) for the six months ended June 30, 2026 increased by $10.2 million, or 30.1%, compared to the six months ended June 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 reflecting the shift in the mix of reports issued. 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. The higher depreciation expense reflects continued investment in and expansion of our laboratory facilities.

Current wording

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.

Previous wording

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 expenses will not necessarily increase or decrease commensurately with the change in net revenues from period to period. We expect our cost of sales expenses (exclusive of amortization of acquired intangible assets) to continue to increase in future periods as we hire additional laboratory personnel and related resources to support expected operational growth and higher test volumes.

Current wording

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.

Previous wording

Our gross margin percentage was 74.0% for the six months ended June 30, 2026, compared to 63.1% for the six months ended June 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.

Current wording

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.