Castle Biosciences Raises Guidance Again as TissueCypher Drives Growth
Castle Biosciences posted second-quarter revenue of $103.5 million, up 20% from a year earlier, and raised its full-year guidance for the second time in 2026.
Castle Biosciences (CSTL), the diagnostics company behind DecisionDx-Melanoma and TissueCypher, reported second-quarter revenue of $103.5 million, up 20% from $86.2 million a year earlier and accelerating from $83.7 million in the first quarter of 2026. The company raised its full-year revenue guidance to a range of $365 million to $375 million, up from $345 million to $355 million, the second increase this year after a similar guide-up in the first quarter.
The growth is now carried almost entirely by TissueCypher. The esophageal precancer test generated 14,988 reports in the quarter, up 63% from 9,170 a year earlier, extending a run of triple-digit-adjacent volume growth that reached 58% in the first quarter. DecisionDx-Melanoma, by contrast, grew reports just 3% year over year to 10,280, down from 16% growth in the first quarter, marking a marked slowdown in the company's original flagship test. Combined, core test-report growth across the two products decelerated to 32% in the quarter from 36% in the first quarter, an early signal that Castle's expansion is becoming more concentrated in a single product line even as the top line accelerates.
Castle Biosciences also guided to positive adjusted EBITDA for the third quarter, fourth quarter and full year 2026, a disclosure that did not appear in the first-quarter release. Adjusted EBITDA swung to $12.4 million in the quarter from a loss of $5.1 million in the first quarter, though the figure was only modestly above the $10.4 million posted a year earlier. Net loss narrowed to $2.1 million from $14.5 million in the first quarter, but still marked a reversal from net income of $4.5 million in the second quarter of 2025.
Margins told a less favorable story. GAAP gross margin fell to 75% from 77% a year earlier, the second straight quarter of year-over-year compression, while adjusted gross margin declined to 76% from 80%, its third consecutive quarterly decline. The erosion has tracked alongside the shift in test mix toward TissueCypher and the continued falloff in DecisionDx-SCC, which posted 4,011 reports in the quarter versus 4,762 a year earlier, a decline tied to an April 2025 Medicare coverage change that has weighed on that product for more than a year.
Cash generation improved but did not fully offset the prior quarter's outflow. Operating cash flow was $15.2 million in the quarter, down from $20.8 million a year earlier, following a $22.1 million cash use in the first quarter. Combined cash, cash equivalents and marketable investment securities rose modestly to $266.8 million at June 30 from $261.7 million at March 31, but remained below the $299.5 million on hand at the end of 2025.
Castle also disclosed that AdvanceAD-Tx received assay approval from the New York State Department of Health, completing full New York State approval across its dermatology, ophthalmology and TissueCypher portfolios, a milestone not mentioned in either of the two preceding releases. The company's disclosure set no longer includes IDgenetix, the genetic-testing product it discontinued in May 2025 after reporting 3,605 reports in 2025 versus 17,151 in 2024 in its year-end release.