CASTLE BIOSCIENCES INCCSTL
CASTLE BIOSCIENCES INC Segments Disclosure
Segment and Related Information
The Company derives revenues through the delivery of test reports for our molecular diagnostic tests. Clinicians use the results from these tests to aid in the diagnosis and treatment of dermatologic cancers, Barrett’s esophagus, uveal melanoma and in the treatment of mental health conditions. All of our operations are located within the United States (“U.S.”) and our business is focused on the U.S. market. Budgets and financial information for net revenues are maintained and are regularly reviewed for each of our tests but expense information is not maintained and readily available below the consolidated results of operations level of aggregation.
We have a single reportable segment consisting of a single operating segment where our CEO is our CODM, which aligns with how our business is organized and is managed.
The accounting policies and measurements of income before income taxes and discontinued operations for the consolidated financial statements and the reportable segment are the same.
The CODM assesses segment performance using actual-to-actual and actual-to-budget variance analysis for segment net revenues, significant segment expenses and net income to assess segment performance and in deciding how to allocate resources.
The measures of segment loss or profit for of our single reportable segment were as follows (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Net revenues from external customers(1) | $ | 344,229 | $ | 332,069 | $ | 219,788 | |||||||||||
Significant segment expenses: | |||||||||||||||||
| Personnel costs | 209,816 | 189,883 | 172,248 | ||||||||||||||
| Organizational and marketing costs | 51,545 | 44,178 | 39,481 | ||||||||||||||
| Inventory usage | 21,821 | 19,930 | 15,475 | ||||||||||||||
| Clinical studies and publication costs | 8,777 | 9,951 | 11,924 | ||||||||||||||
| Professional services | 10,928 | 10,476 | 7,496 | ||||||||||||||
| Other segment items | 65,500 | 39,406 | 30,630 | ||||||||||||||
| Segment (loss) profit | $ | (24,158) | $ | 18,245 | $ | (57,466) | |||||||||||
(1)For information on disaggregation of segment revenue by type and information about payor concentration, see Note 3.
Significant Segment Expenses
Personnel Costs
Personnel costs consist of salaries and wages, bonuses, employee benefits, stock-based compensation expense and payroll taxes. Personnel costs are a significant portion of operating expenses and are a component of cost of sales, R&D expense and SG&A expense. Our CODM considers this information injunction with test report deliveries in assessing budgeted and actual operational performance and in allocating resources.
Organizational and Marketing Costs
Organizational and marketing costs include expense incurred for travel, transportation, meals and lodging, training and conference and venue fees and are a component of cost of sales, R&D expense and SG&A expense. Our CODM considers this information in their assessment of operating expense results and in planning and budgeting for future corporate organizational and marketing activities.
Inventory Usage
Inventory usage is the expense incurred through direct materials used in processing our tests, and are significant component of our cost of sales. Our CODM considers this information injunction with test report deliveries in assessing budgeted and actual operational performance and in allocating resources.
Clinical Studies and Publication Costs
Clinical studies and publication costs include expenses incurred through our pipeline initiatives as well as in gathering evidence to support the clinical validity and utility of our existing test portfolio. Our CODM considers this information in their assessment of R&D results and in planning and budgeting activities.
Professional Services
Professional services include expenses incurred for legal and advisory services across our business as well as expenses incurred for services provided by our independent auditors. Professional service expenses are a component of cost of sales, R&D expense and SG&A expense. Our CODM considers this information in their assessment of operating expense results and in planning and budgeting activities.
Other Segment Items
Other segment items include all other operating expenses types to included 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, foreign currency exchange for certain equity securities and loan receivable, administrative costs, expense for use of prepaids to include insurance premiums and warranties for lab equipment, public company costs (less audit fees), interest and other non-operating 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 loss or profit were as follows (in thousands):
| Years Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Interest income | $ | 11,772 | $ | 12,916 | $ | 10,623 | |||||||||||
| Interest expense | $ | 86 | $ | 577 | $ | 11 | |||||||||||
| Depreciation and amortization | $ | 40,771 | $ | 15,997 | $ | 12,330 | |||||||||||
| Income tax (benefit) expense | $ | (5,356) | $ | 3,319 | $ | 101 | |||||||||||
| Stock-based compensation expense | $ | 45,893 | $ | 50,320 | $ | 51,219 | |||||||||||
| Net gains on equity securities | $ | 1,466 | $ | 555 | $ | — | |||||||||||
Total assets for our reportable segment were located in the U.S. and were $578.6 million and $531.2 million as of December 31, 2025 and 2024, respectively. Expenditures for additions to long-lived assets were $45.1 million, $29.3 million and $13.5 million for the years ended December 31, 2025, 2024 and 2023, respectively.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.