Castle Biosciences. Castle offers a range of tests across dermatologic cancers and GI cancers as well, as well as atopic dermatitis, which we will talk about today. With the company, we have Frank Stokes, CFO. Thanks, Frank, for joining us today. Sure. Appreciate it. So you had your second quarter results announced a couple of weeks ago. A very strong quarter and guidance was adjusted. Can you just talk about what you saw in the quarter, the puts and takes, as well as the guidance update? Yeah, sure. So two key drivers in the business are our DecisionDx-Melanoma and TissueCypher. We saw good performance in both. Modest, I would say, incremental ASP progress across both through the first half of the year. So I think the drivers there are continued penetration, continued physician conversion, and in both tests, really expanding the pool of a physician's patients that they want to test with those two tests. We raised our guidance a little bit more than the beat, so I think we see that signals some optimism in where things go in the second half and continued good performance on the whole franchise. Okay. Specifically with melanoma, I think it was kind of an easier comp in the first quarter. Maybe it was not as great in the second. But what do you see as underlying growth trends in that business? We still see it as this year a mid to high single-digit volume growth test. We're at a bit of a more mature penetration point there. We use about 130,000 melanomas a year, invasive melanomas. SEER data's about 100, but there are some really good publications, there are four actually, that suggest melanoma's under-reported by between 30%- 70%. The dynamic there is melanomas are usually reported in a community or diagnosed in a community derm office, and those offices sometimes don't have experience or awareness of SEER reporting, and so a lot of those cases don't get reported. The publications show 30%- 70%. We use 30% to be conservative, so that gets you 130,000, if that's the right number. If that's the number, we're testing about a third of the patients at this point. We probably have two thirds to maybe a little more of the physicians have used our test or the healthcare practitioners, providers, have used our test in the last year. We're at a little bit chunkier point in the penetration curve. I think we continue to convert physicians, but good, solid performance there, and I think that's going to continue to be an important revenue driver for us. Okay. The derm sales force, there's been some, let's say, changes there. For about a year or so, they have not been incentivized to sell the squamous cell test, DecisionDx-SCC. You would've thought that focus kind of shifted towards melanoma. Now you have this AdvanceAD-Tx test for atopic dermatitis, which I believe that the team is kind of split between that as well. Did that cause any impact on volume in the quarter with those things? The compensation structure still skews almost totally toward melanoma. Okay. We are building a longer-term value franchise in our derm business. We also have our SCC test, which is currently poorly reimbursed and not covered by Medicare, and we have our MyPath Melanoma test as well. We have a fairly robust derm portfolio there, and we have to sort of balance Q2. What are we doing for Q2 versus what we are doing for 2027, 2028? We have some attention on some other testing that the sales force has directed, but by and large, most of what they are doing is focused on melanoma. All right. Then maybe just speak to the medium-term opportunity in melanoma. It is a mid to high single-digit grower, but I think this year could be a little elevated given maybe the comps or something. Just talk about whether there is a runway there. I think we still have plenty of runway in melanoma. Other modalities, the percentage of testing is higher than in melanoma. You have thyroid at 60%-ish- 65%-ish. I think prostate is in the 50% maybe. One of the differences we have is in melanoma, we have one primary test, and really one test with quality data. So the overall testing penetration is a little bit more subdued, but I think we can continue to grow that. How long does it take to get to those points, I think, is the question. But every physician meeting, every day, we have a physician that somehow, despite 12- 14 years of selling this test, we still have some physicians who still are not aware of it, have not heard of it, have not been educated on the benefits of it. So we continue to find new physicians to convert. Within those physicians, we do a ton of R&D and study work to demonstrate the benefit of testing all their patients. So you have a new store and a same store opportunity there, if you think about it that way from the physician perspective. Physicians will frequently do their own risk stratification. Maybe they are comfortable at a millimeter and below is a low-risk melanoma, so I do not need a test. Millimeter and above is high risk. In the first place, we have data that shows that we are clinically actionable all the way down to three-tenths of a millimeter. Below that, there is no actionability, no benefit to testing. But anything above three-tenths, there is benefit. On top of that, you have the opportunity to just break it down for a physician, just from a practical perspective. We are not talking about a breast cancer where you are talking centimeters of diameter. A melanoma thickness of less than a millimeter or more, a tenth of a millimeter is far less than a strand of hair. So it is an easy or a good chance to go to a physician and say, "Listen, we understand your kind of historical high-risk analysis based on clinical pathological features. But at the end of the day, nine-tenths of a millimeter and 1.1 mm is almost negligible. So is that really a good break for risk, or should it be more biologically driven?" We have got data to support it, and that is a good engaged conversation to have with a physician to help them see that there is a larger group of their patients that can benefit from testing. If you receive FDA approval one day for that, because I think that is a breakthrough or your plan for that. We do. We have breakthrough designation for it, and we have said we intend to file for FDA clearance. I think that our view on FDA clearance is similar to some of the other companies that you follow, where we are not necessarily focused on regulation and the regulatory environment or potential change there. But really, one of the primary benefits we think should be around what is now very, very poor payer compliance with state biomarker laws. I think we just passed half the states now. I think more than half, and then population-wise, it is much more than that, are in states that have biomarker legislation. Most of the time, the payers are just simply ignoring it, and are being allowed to do that, which is discouraging. Among the criteria that those laws frequently list, and most of them, if you look at across the country, most of them are modeled after the Illinois law. The Illinois law was one of the first ones. Most of them just copied that. But among the criteria are FDA clearance, and it should be the case that for a payer to inappropriately deem a test or a test service to be experimental investigational when the FDA has cleared it, that would strike many of us to be a difficult argument to make with a straight face. So part of our strategy there is not only demonstrating the quality of the data, supporting the test, the development, the validation, and the continued support, but also on the reimbursement side, helping have another tool in the box to try to have payers stop acting inappropriately. All right, great. Maybe moving to TissueCypher, that's been a really significant growth driver, a great acquisition a couple of years ago. Talk about the growth in the quarter for volume for that test and if you're seeing any maturity and seasonality with that business. Yeah, we probably have had the luxury of missing seasonality, just given where we were in the ramp, and we were so early in our penetration. We probably were able to mask it or grow through it just through early penetration where we were in the curve. We believe in Q1 that third-party data suggests that there were fewer, and recall there our patient population, our patients who are having an upper GI endoscopy for purposes of Barrett's esophagus surveillance, about 420,000 a year of those. The data suggests that Q1 had a lower number of those procedures than Q4 did. I don't have the data for Q2 yet. I suspect that maybe some of those Q1 procedures got delayed a bit into Q2. We can suppose, I don't have good data to say one way or the other why that might happen, but it is clear, and you hear it from other services companies, that the reset of deductibles in the first quarter of the year does in fact change patients' behavior and the way they approach either elective procedures or non-emergency, non-acute healthcare procedures does become impacted by that change in the deductible. So that may be one reason we see it. We've really tried to look less so incremental quarter to quarter sequentially on TissueCypher, but to look more kind of a rolling four-quarter trend, and you see that it's much more steady around a trend line when you take a little broader lens. I think we're just going to be, probably for the rest of the year, in that same environment, which is a combination of early in the launch, and early in our commercial expansion. We've added some commercial resources there, so we're early in that process. We're newly penetrating a new area. We're not displacing a technology. We're not replacing a technology. This is supplemental and additive to the dysplastic criteria that GIs have always used to determine risk for a Barrett's esophagus patient. The reality is that generally speaking, GIs will intervene with a dysplastic Barrett's. If a Barrett's patient has high-grade dysplasia, even moderate dysplasia, it's generally the case the GI's going to intervene or consider intervention with ablation. I said a couple of times, ablation may not be 100% effective, but it's pretty close to 100% effective in terms of preventing the progression to esophageal cancer. Barrett's is the only precursor to esophageal cancer that there is. Esophageal cancer has an 85% five-year mortality rate. So it's a terrible diagnosis for a patient. By the way, those five years are a fairly difficult five years given the interventions that occur to try to extend life. So if it's a moderate dysplastic patient or a high-grade dysplasia, the physician is almost certainly going to intervene with ablation, and that's almost certainly going to work. So what that means is that the esophageal cancers are coming out of the low-risk population, the non-dysplastic, the low-grade dysplasia, or indeterminate dysplasia, because physicians don't want to ablate everybody. Sometimes you get a question, "Why don't we just ablate everybody? Just ablate all the Barrett's patients every year." We can't do that for a number of reasons: cost, capacity, but also ablation is not without side effects and not without risk. So you certainly don't want to ablate a patient that doesn't need it. So what the test does is it takes that large pool, which is 80%+ of Barrett's biopsies that are low risk by physical characteristics or by dysplasia status, and it identifies for the physician which ones of those patients may yet still be at risk for progression to esophageal cancer. Then the physician has a number of options then. More frequent surveillance, potentially ablating the patient and intervening before that Barrett's progresses. So there's a large pool of untested patients yet. We think that if we take our Q2 volume numbers and annualize it, just do a run rate, and if our data on the number of endoscopies is correct, we're at about 15% patient penetration on a run rate. That suggests a couple things. One, it suggests that there's plenty of room to go. It suggests that if we could get the penetration of our TissueCypher test to where our melanoma test is now, that's better than a double in terms of that business alone, that test alone. We continue to build our value to the physician community with their Barrett's patients. Eventually, at some point, it's our intent to have other testing services available to that physician community to leverage our marketing effort, our promotion effort there. As we continue to build that value of the educational channel, if we are able later to add something to it'll be exponentially more impactful. Okay. As you target doubling the market share, the market penetration, sorry, what could accelerate that? What could be some accelerant? You have expanding sales force, you just did that recently. You have maybe guidelines or something, some sort of two more data, things like that. Sure. As well as, yeah, just any sort of penetration increases. Yeah. I think that there's nothing immediately obvious to me that might be a stepwise increase. What could bend the curve or accelerate the curve? Of the three significant GI societies, the test is already mentioned in the practice guidelines in two of the three as recommended. We have good societal support. There's good societal recognition of the benefit of testing, particularly these low-grade or non-dysplastic patients. I think we're in a good position there. We did make an expansion in our sales force earlier in the year, and it'll take some time for those folks to get up to full productivity and full contribution. They'll get there at some point in the back H2 of this year. I think that'll help as well. But again, it's mostly, in that case, it's physician education. There's not a competing modality that we have to displace. There's not a procedure that's being taken away or replaced. It really is educating the healthcare community on the clinical question, which it turns out many of them are aware and when you talk to a GI, it's similar to a derm. A lot of derms have a patient in their practice history that was a T1a, very low-risk melanoma, and the physician said, "This is great. This is what you're supposed to do. You saw a lesion, you came in here, we got it early, we removed it. You did what you were supposed to. Good job. Now all we got to do is we'll just worry about others. Just come back in a year and we'll do a skin check and watch for other melanomas." Then a year and a half later, that patient has presented in the ER, and they're coughing up blood or because they've got lung mets or brain mets, and the physician says, "How did that happen?" There's a discordance between, in the case of melanoma, as we've talked about 80% of melanomas are initially diagnosed at low risk, i.e., "Let's remove it. You did good. Go on your way." But two-thirds of the melanoma deaths come from that low risk pool. There's discordance there in the traditional risk stratification, and then the actual prognostic potential of the patient. You see the same thing on Barrett's esophagus. The vast majority of these patients are non-dysplastic, low-grade, but that's where most of the cancers come from. Similar, you have GIs, many GIs who have a patient in their practice history who is non-dysplastic Barrett's esophagus and progressed to esophageal cancer because you don't intervene because they're low risk. I think that clinical need is well understood, and so it's really our goal and our hurdle is to educate the physician community. They understand the challenge, they understand the problem. Here's the solution or a potential tool to add to your treatment, and here's why it's valid, and here's why you can trust it. Okay. Sounds good. I guess one more on that. How do you think about the demographic probably might not skew totally towards the Medicare age group. Commercial plans, what's been the bottleneck to gaining broader coverage among them, and could that happen kind of soon? I think that we certainly don't see anything unique to TissueCypher as it relates to that question. Roughly speaking, our Medicare volume tends to be sort of a little bit less than half of all the patients are Medicare age. So that's a blend of direct Medicare, straight Medicare, and Medicare Advantage commercial plans. The balance are commercial. The cost savings are there. The impact on the patient groups are there. It's really a matter of penetration to get the test to the point that, again, a payer can't, with a straight face, call something experimental when it's being widely used. We've got a ways to go to get to that level of penetration when that becomes apparent. Okay. Let's move on to the atopic dermatitis test, AdvanceAD-Tx, called Advance AD. You did a limited early, kind of an early access program in 4Q. It still looks a little bit limited and early in the last two quarters. I think you may have gotten to 1,000 or so orders in the second quarter. It's early days, but maybe talk about how you're commercializing thus far, what's the plan for the next few quarters as you dig deeper into the reimbursement process? Sure. Maybe even touch on what's happening there. Yeah. The test is we made it available in Q4. The test is available now. Great physician receptivity, that was almost a double in terms of volume, but off a small base to be sure. The need is pretty well understood on the part of many of the healthcare providers. Biologics don't work in all patients, and somewhere between 40%- 60% of the time, a biologic doesn't work. While we recognize there are some physicians who aren't going to use JAK inhibitors for a variety of reasons, some of the early JAK approvals came with a black box, and still have the black box. There are some concerns about toxicity, which we certainly understand, but I think there's a growing comfort and awareness that with a subset of patients, JAKs are safe and effective. Physicians want to understand, is this a patient that's going to respond to a biologic, or is this a patient that's going to respond to a JAK inhibitor? The correct identification and answer of that question and correctly getting a patient on the right medication at the right time, of course, there's patient satisfaction, there's patient improvement. There's physician satisfaction. They don't have a patient coming back multiple times for the same concern, the same complaint. There's potentially a fair amount of economic benefit as well. These drugs are all expensive, and patients who are on them have generally failed a number of other more inexpensive topicals, generics, et cetera. By the time a patient gets to the point a physician is considering a biologic or a JAK, it's an acute case. The patient's failed the easy answer. The patient's failed that. The patient's still not satisfied and not responsive, so the physician needs to try something that's more effective. I think you're going to have a couple of groups of physicians. I think you're going to have a group of physicians who say, "Look, there's a biologic that I've used forever, and I'm going to use that first, and I'm going to continue to use that first. If that doesn't work, then I'm going to consider AdvanceAD-Tx to see if I should consider a class of drug change or just kind of progressing through the biologics." Then I think there's a group of physicians who are going to take a different approach and view it as an opportunity to say, "I'm going to avoid a failure altogether, and I'm going to run this test, and then I'm going to know which class to start with." Sometime maybe down the road, there are other follow-on opportunities we have in inflammatory skin disease. But the ability to, when you have a switch, in addition to the dissatisfaction that I referenced, you've got a high cost because a patient's getting a prescription, probably not using all of it, getting another one. These drugs are frequently front-end loaded. The expense can mount along with that patient fatigue and dissatisfaction. So we've made the test available. We had a pretty important milestone in that we had recommended, in terms of setting a price on the fee schedule, we had recommended a crosswalk to another test. The advisory committee met and announced their results, and they unanimously recommended alignment with that. We'll see where CMS comes out. CMS has high percentages of following their advisory committee, not always, of course, but they frequently follow that committee. Where that comes out is important in terms of setting a metric so that we can begin to work with commercial payers on getting payment on a claim-by-claim basis. Frequently, you'll see a physician has made in the patient notes, the treatment was changed, therapy was changed, drug was changed as a result of the read of this test. So we're still early days in that reimbursement process, so that's led us to be a bit more subdued in terms of aggressively marketing the test and aggressive promotion. But we have a high level of confidence that the physician reception is going to be strong, the clinical need is there. So we're enthusiastic that could be a good test for us, particularly going forward. I don't think we see big revenue in 2026, but I think we begin to see some revenue impact in 2027. You need a Medicare MAC to kind of legalize it? For Medicare, we would need to have a coverage decision by one of the MACs. Which one? Either. For us, it- Yeah, you have two options. Yeah, we have two options. I think that the incidence in AD is a little bit lower. I think we expect early days to see 15%-20% of the patients be Medicare age. Medicare is clearly important. Then, of course, you have the impact of Medicare coverage on the commercial payers as well. We will work with the MACs appropriately to hopefully demonstrate how they can save some significant drug spend, as well as get Medicare beneficiaries the right technology and the right care. Do you think there is a risk to having the code and the payment rate prior to actual coverage? Because maybe if it is a code on the payer's list, it is easier to turn it off, maybe. Look, there's a history of payers, once you have a code, now they know what they say no to. Yeah. I guess is kind of the less elegant way to say that. There is that, but we've always taken the approach that we're not trying to sneak one by, right? We provide a medical service, a significant patient benefit, and we don't see a need to obfuscate that with a miscellaneous code or something like that and sort of almost hope it doesn't get noticed or something. Maybe that's the way you might put that. Having a PLA code so that we can have an engaged discussion and an informed dialogue with whatever the payer is, Medicare, commercial, we think that's important. And yes, that sometimes may be used as a tool by some of the commercial payers, but that's the approach we prefer to take. Okay. We have a couple minutes left. On DecisionDx-SCC, that was non-covered a year or so ago. It's been non-covered for about a year and a half or so. You went out with a reconsideration request, I think a little less than a year ago. Maybe it was in September, it was. Yeah. It's coming up on a year for both contractors. The next stage would be maybe if everything goes well, I guess according to plan, a CAC meeting perhaps, then a draft LCD that would include you know, SCC for coverage, and then the final would be months after that, maybe. Is that the pathway? That would be typical. It would be typical that we would see a comment, Contractor Advisory Committee, a CAC meeting, a comment meeting, and then the contractor would incorporate that comment with the tech assessment we've provided, the data we've supplied, and present a proposed draft coverage LCD, including coverage criteria. Then those have typically taken a year to get from draft to final. I think that's the bookend is a year. That would be the typical approach we would see. We certainly have submitted significant data since that draft. Since the current LCD was effective in April of 2025, we certainly have provided significant incremental data that certainly wasn't part of either contractor's analysis originally, just given the timing and the publication. We've provided a significant amount of information, a significant amount of data. We've answered a lot of the questions that were raised in the early drafts of the negative coverage policies. We look forward to the chance to have a CAC to be able to engage with stakeholders and continue to demonstrate the validity of the test and the benefit to Medicare beneficiaries. Yeah. The next catalyst will be this CAC meeting, hopefully, and then- Potentially. Although it's not required. Okay. Yeah, could be. But the earliest you could receive payment for that test again, you guys kind of estimate maybe mid to later in 2027. Yeah, H2 2027 maybe. Is probably. Okay. That would probably be upside case. Yeah. All right. So maybe just finally, any thoughts on 2027, like factors that we should be considering with respect to growth on the various subjects that we talked about? The newer pipeline test, AD test, as well as the core kind of tests. And then also, just even the positive, you are basically there each quarter, so that is good to see as well. So what does 2027 hold for us as a financial profile as a whole? Sure. We did say that we anticipate absent any significant strategic changes, that we will be adjusted EBITDA positive for 2027 as well. We expect to be positive through the rest of 2026. I think 2027 is exciting. I think we have got some pipeline opportunities that we can begin to provide more visibility on and provide some progress. I think continuing to see the continued penetration of our lead products is exciting as well. There are a number of catalysts. There is reimbursement catalysts, SCC and AD, that could be impactful. But it is funny. For a long time, we had one test on the market, then we had a couple of tests. And it is nice to see the effort mature such that we have multiple on-market products as well as a robust pipeline of potential future opportunities. All right. Great. Thanks, Frank. Appreciate it. Thanks. Awesome. Thank you.