Good afternoon all, and thank you for joining us for the Castle Biosciences' Q2 2025 Earnings Call. As a reminder, this call is being recorded. We will begin today's call with opening remarks and introductions, followed by a question-and-answer session. I'd now like to turn the call over to Camilla Zuckero, Vice President, Investor Relations and Corporate Affairs. Camilla, when you're ready.

Thank you, operator. Good afternoon, everyone. Welcome to Castle Biosciences' second quarter 2025 results conference call. Joining me today are Castle's Founder, President and Chief Executive Officer, Derek Maetzold; and Chief Financial Officer, Frank Stokes. Information recorded on this call speaks only as of today, August 4, 2025. Therefore, if you are listening to the replay or reading the transcript of this call, any time-sensitive information may no longer be accurate. A recording of today's call will be available on the Investor Relations page of the company's website for approximately 3 weeks following the conclusion of the call. Before we begin, I would like to remind you that some of the statements made today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our financial outlook, TAM, intended use populations and similar items referenced in our earnings release issued today and statements containing projections regarding future events or our future financial or operational results and performance, including our anticipated 2025 total revenue, our expectations regarding reimbursement for our products, opportunities for growth, the clinical value of our tests, impacts of seasonality and other trends, the timing of targeted milestones, our M&A strategy, our ability to capitalize on strategic opportunities, including our recent SciBase and Previse transactions and the impact of our investments in growth initiatives, including our ability to achieve long-term growth and drive stockholder value. Forward-looking statements are based upon current expectations and involve inherent risks and uncertainties, and there can be no assurances that the results contemplated in these statements will be realized. A number of factors and risks could cause actual results to differ materially from those contained in these forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's annual report on Form 10-K for the year ended December 31, 2024, and its quarterly report on Form 10-Q for the quarter ended June 30, 2025, under the heading Risk Factors and in the company's other documents and reports filed or to be filed with the Securities and Exchange Commission. These forward-looking statements speak only as of today, and we assume no obligation to update or revise these forward-looking statements as circumstances change. In addition, some of the information discussed today includes non-GAAP financial measures such as adjusted revenue, adjusted gross margin and adjusted EBITDA that have not been calculated in accordance with generally accepted accounting principles in the United States or GAAP. These non-GAAP items should be used in addition to and not as a substitute for any GAAP results. We believe these metrics provide useful supplemental information in assessing our revenue and operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which has been posted on the Investor Relations page of the company's website. I will now turn the call over to Derek.

Thank you, Camilla, and good afternoon, everyone. Following a strong first quarter, our team closed out a very successful second quarter that was ahead of our expectations. We believe this strength reflects the clinical value our tests provide to clinicians and their patients. Thanks to the strong execution by the entire Castle team, we delivered revenue of $86.2 million and total test report volume of 26,574, with tests for our core revenue drivers growing 33% year-over-year compared to the second quarter of 2024. Additionally, we are pleased to have maintained strong gross margins and a healthy balance sheet, ending the quarter with $275.9 million in cash, cash equivalents and marketable securities. This financial strength positions us well to continue investing in our near-term growth initiatives, including expanding our body of clinical evidence and commercial team optimization efforts, along with strategic investments and pipeline developments to support longer-term growth. Today, I will walk you through business highlights from the second quarter, and then Frank will provide additional financial highlights before we turn to your questions. On to our quarterly highlights. For DecisionDx-Melanoma, we delivered 9,981 test reports during the quarter, which resulted in a sequential increase of approximately 16% compared to the first quarter of 2025 and a year-over-year increase of approximately 4% compared to the second quarter of 2024. On an absolute number basis, this is the largest second quarter over first quarter sequential increase in volume for DecisionDx-Melanoma we have seen since our IPO in 2019. We expect continued solid growth in the second half of the year. And as a result, we are reiterating our expectations for high single-digit volume growth for DecisionDx-Melanoma for the full year 2025 compared to the full year 2024. Castle has invested in generating a substantial body of evidence to support the clinical performance and use of our DecisionDx-Melanoma test. We're particularly proud of our ongoing collaboration with the National Cancer Institute's Surveillance, Epidemiology and End Results Program Registries, or NCI SEER for short, which was initiated back in 2021 and continues to evolve. Prior studies have shown that clinicians use DecisionDx-Melanoma to inform both avoiding sentinel lymph node biopsy surgical procedures in low-risk patients and initiation of surveillance imaging and referrals to medical oncology in high-risk patients, which enables early detection of recurrences and earlier initiation of therapy. Early detection has been shown to improve outcomes to a greater extent when therapy is initiated with a smaller metastatic tumor burden, which improves net health outcomes. In fact, during the second quarter, we presented novel research aimed at enhancing the clinical management of patients with cutaneous melanoma at the 2025 American Society of Clinical Oncology Annual Meeting. This NCI SEER study presented an updated matching of patients who received DecisionDx-Melanoma as part of their clinical care to those who did not. This large real-world cohort included 13,560 patients with cutaneous melanoma whose treatment plan was managed with the results of our DecisionDx-Melanoma test. This represents the largest real-world study of gene expression profile testing to date. The clinical use of DecisionDx-Melanoma was associated with a 32% reduction in mortality risk compared to untested patients, meaning patients whose treatment plan did not include the use of our DecisionDx-Melanoma test. These results provide further evidence of our test association with improved patient survival. Moving on to our DecisionDx-SCC test. We are very pleased with our volume performance, delivering 4,762 test reports in the second quarter of 2025. As a reminder, DecisionDx-SCC reimbursement for the second quarter reflects a Novitas Local Coverage Determination policy, or LCD, that went into effect for dates of service on or after April 24, 2025, and included noncoverage language for our DecisionDx-SCC test. That said, early in the third quarter, we submitted our DecisionDx-SCC reconsideration request for both the Novitas and MolDx LCDs. Under CMS guidelines, MACs have up to 60 days to accept or reject a reconsideration request. Importantly, we have already received notification from Novitas that based upon CMS guidelines, our reconsideration request was determined to be a valid request and was accepted as such. We are still awaiting notification from MolDx. While this is not an indication of the likelihood of coverage, it is a step forward in the process. It's important to note that as is the case for the development of a new LCD, there is no specified timeline for a final reconsideration decision. We expect to keep you informed of updates as appropriate. Now let's turn to our gastroenterology franchise. TissueCypher continued its strong momentum in the second quarter, delivering 9,170 test reports compared to 4,782 in the same period of 2024. This represents a 92% year-over-year growth compared to the second quarter of 2024. We continue to believe the growth drivers for TissueCypher in 2025 and beyond include, first and foremost, a recognition of the unmet clinical need; and two, continued commercial optimization, which includes a strong focus on education and awareness. Lastly, moving on to our pipeline initiatives. In June, we entered into an exciting collaboration and license agreement with SciBase, a Swedish-based public company that focuses on advanced electrical impedance spectroscopy or EIS technology, which includes both desktop and point-of-care instruments. The initial goal of the collaboration is to advance the development of a diagnostic test that predicts flares in patients diagnosed with atopic dermatitis, a U.S. market with an estimated patient population of up to 24 million people. We expect that should our development program be successful, this test will enable us to meet another significant unmet clinical need for many of the clinicians who have already adopted our DecisionDx-Melanoma and SCC test for use in skin cancers. Staying with this atopic dermatitis theme, I'm pleased to provide an update regarding our internally developed pipeline test. As we have talked about in the past, we have a program underway to see if our novel specimen collection technique, coupled with gene expression profiling, would be successful in identifying a genomic signature that could predict treatment responses to patients who are diagnosed with moderate to severe atopic dermatitis and eligible for or seeking systemic therapy, be it an injectable biologic or an oral therapy. Based upon our analysis to date, we believe that our development program has been successful. Specifically, we've identified a signature, which has been validated in an independent patient cohort that identifies patients who are likely to have strong relief from atopic dermatitis symptoms, specifically in their response as measured by 3 core indexes: first is an improvement in their eczema area and severity index, or EASI score, as it’s known; second is improvement in itch symptoms; and third is a reduction in flares. Assuming continued success with our validation assessments, we expect to launch this pipeline test by the end of 2025. Lastly, our Previse acquisition brings a robust technology pipeline, which has the potential to increase our current GI offerings. Specifically, we believe there is an opportunity to create a multi-omics approach for improved test value in Barrett's esophagus as well as a non-endoscopic sample collection device for pipeline opportunities to potentially expand screening and diagnostic support for patients with Barrett's esophagus and other GI diseases. And with that, I will now turn the call over to Frank.

Thank you, Derek, and good afternoon, everyone. Reiterating Derek's sentiment, we are pleased to report strong second quarter financial results. Net revenues for the 3 months ended June 30, 2025, decreased by $0.8 million or 1% to $86.2 million compared to the 3 months ended June 30, 2024, due to a $12.5 million decrease in revenue from our dermatological tests, offset by an $11.7 million increase in revenue from our non-derm tests. The $12.5 million decrease in net revenue for our dermatological test was primarily attributable to our DecisionDx-SCC test and the $11.7 million increase in net revenues from our non-derm tests was largely attributable to our TissueCypher test. While we do not typically disclose revenue by test, we estimate that revenue from DecisionDx-SCC for the second quarter of 2025 was just above $15 million. If you exclude DecisionDx-SCC revenue from both the second quarter of 2025 and 2024, our normalized revenue growth for the second quarter of 2025 would be approximately 23%. We are providing this information for this quarter due to the specific circumstances regarding DecisionDx-SCC's noncoverage decision, which went into effect during the second quarter of 2025. Adjusted revenue, which excludes the effects of revenue adjustments in the current period related to tests delivered in prior periods, was $86.2 million for the second quarter of 2025, a decrease of 1% compared to the second quarter of 2024. For total revenue for 2025, we are raising our revenue guidance to $310 million to $320 million, up from the previously provided range of $287 million to $297 million, which reflects the DecisionDx-SCC LCD with a date of service effective date of April 24, 2025. Again, we do not disclose revenue by test, but for an apples-to-apples comparison for 2025 revenue growth, if you exclude DecisionDx-SCC revenue from both our '24 and '25 totals, our normalized revenue growth range in 2025 would be approximately 21% to 26%. Our gross margin during the second quarter of 2025 was 77.3% compared to 80.7% in the second quarter of 2024. Our adjusted gross margin, which excludes the effects of intangible asset amortization related to our acquisitions and excludes the effects of revenue adjustments in the current period associated with test reports delivered in prior periods, was 79.5% for the quarter compared to 83.2% for the same period in 2024. Turning to expenses. Our total operating expenses, including cost of sales for the second quarter of 2025 were $90.4 million compared to $82 million for the second quarter of 2024. Sales and marketing expenses for the quarter were $35.1 million compared to $32.7 million for the same period in 2024. The increase is mainly due to higher organizational and business development activities costs and higher sales-related travel expenses. General and administrative expenses were $22.9 million for the quarter compared to $18.4 million for the same period in 2024. The increase is primarily attributable to higher personnel costs and higher information technology-related costs. Higher personnel costs reflect headcount expansions in our administrative support functions as well as merit and annual inflationary wage adjustment for existing employees. Cost of sales expenses were $17.6 million in the second quarter of 2025 compared to $14.5 million in the second quarter of 2024, primarily due to higher personnel costs, higher lab services costs and higher expenses for lab supplies. 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 adjustments for existing employees. Higher expenses for lab services and lab supplies also reflect higher test report volumes. R&D expenses were $12.8 million for the quarter compared to $14.1 million for the same period in 2024, primarily due to lower expenses for clinical trials. Total non-cash stock-based compensation expense, which is allocated among cost of sales, R&D and SG&A, was $11.2 million for the second quarter of 2025, down from $13.2 million in the second quarter of 2024. Our net income for the second quarter of 2025 was $4.5 million compared to net income of $8.9 million for the second quarter of 2024. Diluted earnings per share was $0.15 compared to diluted earnings per share of $0.31 in the second quarter of 2024. Adjusted EBITDA for the second quarter was $10.4 million compared to $21.5 million for the comparable period in 2025. Net cash provided by operating activities was $20.8 million for the second quarter of 2025 and $14.8 million for the 6 months ended June 30, 2025. We continue to expect to deliver positive net cash flow from operations for 2025. Net cash used in investing activities was $50.8 million for the 6 months ended June 30, 2025, and consisted primarily of purchases of marketable investment securities of $92.8 million, our asset acquisition of Previse, purchases of property and equipment and purchases of debt securities classified as held to market, partially offset by the maturity of marketable investment securities. As of June 30, 2025, we had cash, cash equivalents and marketable securities of $275.9 million. As we look beyond prebuys and the license agreement with SciBase, we look to put the strength of our balance sheet to work through a disciplined and strategic approach to capital deployment, focusing on investing our capital for stockholder value. As it relates to M&A, our strategy is centered on complementing our existing portfolio to drive mid- to long-term value creation. In today's dynamic reimbursement environment, we consider diversification, expanding both our test portfolio and payer mix while also maintaining a disciplined approach with an aim to ensure any transaction supports near and midterm profitable growth. Our key M&A priorities at this time include: one, pursuing opportunities where our test is already on the market and has established reimbursement; two, favoring tests that complement our current portfolio and/or offer high clinical value in adjacent therapeutic areas; finally, exploring areas where we can develop pipeline tests that enhance the value we deliver to existing customers. In conclusion, I'm pleased with our excellent financial results in the second quarter, continuing our long-standing history of strong execution and performance excellence. I'll now turn the call back over to Derek.

Thank you, Frank. In summary, we delivered another strong quarter and furthered our position as a leader in both our dermatologic and gastrointestinal testing franchises. We are excited about our performance in the first half of the year and believe our ability to create value for our stockholders in the near and long term remains intact. Thank you for your continued interest in Castle Biosciences. Now we will be happy to take your questions.

Our first question comes from Thomas Flaten from Lake Street.

Congrats on a great quarter. Just first, with the breakthrough designation you got for Dx-Melanoma just a few weeks ago, anything you can share with us on your plans to seek FDA approval studies, et cetera, just lay out kind of the bigger strategic thinking there?

Thanks, Thomas. Derek here. With the breakthrough device designation approved, we are moving forward with our efforts toward an FDA submission. I don't think we need to disclose the timing of that right now, but it is part of our anticipated outcome for pursuing the designation in the first place.

Got it. And then, Frank, with the numbers that you kindly shared around SCC, it seems that kind of on an ASP basis, you may have gotten more than just kind of a 2/3, 1/3 split throughout the quarter. Are you getting paid on any of the volume that isn't Medicare at this point?

We get paid episodically on commercial claims, yes, not in significant percentages, but we do get some payments.

But remove that from our thinking going forward as consistent with prior guidance?

There will be some. One of the challenges you have is just timing, Thomas. A lot of times that comes out of period. So sometimes you'll see that show up in prior period revenue. But yes, we'll have some modest payments. But again, it's not a significant percentage.

Our next question comes from Mason Carrico from Stephens.

I think you've historically talked about 6 months for a sales rep to reach average productivity. Could you give us some insight into how many GI reps had reached that level of tenure maybe at the start of Q2 as well as how many have now hit that threshold as of today?

I think we scaled to the current level of territories just before year-end. So they would have been certainly in training in the first quarter. So I would think as we're exiting into the third quarter now, and you would assume if our modeling was correct about 6 months to KPI will be up to full speed, we should be hitting that with a fully mature, I guess you call that sales team in the third and fourth quarter of this year.

Okay. Now that the derm sales force is refocused on melanoma, could you provide some insight into the utilization trends you observed after that shift and how those trends have evolved since then?

I actually don't think I can from a data standpoint. As you know, with the LCD being effective April 24, however, there are some laboratory orders coming in and reports that were going out with the date of service before April 24. So we didn't really make a hard shift until the end of the quarter anyway from sort of a compensation focus standpoint. And also the SCC test is important to our clinicians as well. So I think going forward, we can go ahead and see what the third and fourth quarter looks like from sort of a future modeling standpoint if they're solely focused on the melanoma test.

Our next question comes from Mark Massaro from BTIG.

Congrats on a good quarter, the beat and the raise. I wanted to start with your internal developed product for atopic dermatitis. It's nice to see that the program has reached sort of your internal hurdles. So now that you're planning or still on track to launch it by year-end 2025, can you just give us a sense for what the reimbursement outlook is for atopic dermatitis? Is this something where you're going to pursue an LCD? Or are there reimbursement mechanisms in place that you could benefit from?

We are still on track to have the test available clinically on a limited launch basis by the end of the year, and we had set that expectation for September 21, 2022. In terms of reimbursement, we are exploring three or four avenues simultaneously, but it's too early to determine which will ultimately drive the most revenue. We believe there is significant clinical value for patients moving from a standard trial-and-error treatment approach to more effective therapies. When patients have severe symptoms and consider moving from topical treatments to systemic therapies, it’s essential to understand the therapeutic benefits, side effects, and costs involved. With our test, patients can learn if they are likely to respond well to JAK inhibitors, which is promising for us. I believe there are several reimbursement opportunities moving forward. However, considering the launch is at the end of this year, I expect the revenue impact to be minimal for 2026, but it should become more meaningful in 2027, 2028, and 2029 as we see how 2026 progresses.

Okay. Great. And my second question, your squamous cell carcinoma volume certainly exceeded my expectations. And I recognize that the noncoverage decision went live in April. So I think on the last earnings call, you talked about how you plan to continue to offer the test. And so recognizing that you've submitted your reconsideration request for Novitas and MolDX, should we continue to expect you to continue to offer it perhaps until a time that you hear back from the reconsideration request? Is that the right way to think about it?

Yes, we expect that over the next few quarters, the volume will moderate as we're not focusing our educational sales efforts on that test specifically. We are not planning to remove the test from the marketplace. Castle Biosciences was founded with the primary goal of developing innovative tests that significantly impact patient care, and this situation is no different. The LCD process we’ve discussed previously is disappointing regarding patient care, especially considering Novitas quickly accepted our reconsideration submission as valid. This gives us a sense of optimism to move forward, even though it marks just the start of a reconsideration process. Therefore, we do not foresee removing SCC from the marketplace in the short term, as keeping it available is the right decision for patient care. This might lead to some moderation in our cost of goods sold and possibly our gross margin, but ultimately, we believe it is the right approach for our patients, and consequently, for Castle.

Okay. If I can sneak one last one in. One for you, Frank. It looks like you beat consensus by about $15 million in Q2 on revenue. You raised, I think, the midpoint of the guide by $23 million. Can you just give me a sense for the drivers in the back half of the year and perhaps remind us about any seasonality between Q3 and Q4?

Yes. So on melanoma, as we've said, each quarter, we see seasonal flatness typically from Q2 to Q3 and Q3 to Q4. And so that's been the historical trend, and that data is in our MD&A that you can see there. But other than that, we're seeing good strong drivers across the business and accordingly, we raised our guidance.

Our next question comes from Puneet Souda from Leerink Partners. Yes. So on melanoma, as we've said, each quarter, we see seasonal flatness typically from Q2 to Q3 and Q3 to Q4. And so that's been the historical trend, and that data is in our MD&A that you can see there. But other than that, we're seeing good strong drivers across the business and accordingly, we raised our guidance.

First one on TissueCypher. Strong growth there in the quarter. Just wondering how we ought to think about the cadence of volume growth here, third quarter, fourth quarter. And wondering if you're willing to provide anything in terms of 2026 for that.

We're not going to maybe start with last first.

Not yet. We haven't provided any insight into '26 yet. But yes, we agree, good continued growth in that test volume trends.

Okay. In terms of the overall guidance for this year, can you provide any context regarding the volume growth we should consider?

I'll give a try, Puneet. Our guide does assume continued growth in volumes in TC. We expect at some point to hit seasonality with that test. But right now, we're still just very underpenetrated. And so we don't yet see seasonality in it.

Got it. Okay. I appreciate the details on the reconsideration request and the 60-day timeline. Could you clarify when you expect to hear back from MolDX? What was included in the reconsideration request package this time? It seems you are anticipating a positive outcome, so please correct me if I'm wrong. Additionally, can you share your thoughts on the overall timing for MolDX? If the reconsideration request were to be declined, what other options would you have at this moment?

I will provide an overview of our recent actions. We submitted a reconsideration request to both Novitas and the MolDX group. Novitas responded quickly, acknowledging our submission as valid per CMS guidelines, which was expected. The request to Palmetto was submitted around the same time, likely in early July. According to CMS guidelines, MACs have up to 60 days to acknowledge receipt as valid or invalid. We haven’t received any feedback yet, which aligns with what we anticipated. I expect to hear back around Labor Day. Regarding the submitted package, while we won't make it public, it’s worth noting that after the open comment period for both Novitas and Palmetto ended, neither was required to reference any published evidence or literature dated after that period. Since then, several peer-reviewed publications have been released, including studies addressing comments from MolDX related to the draft LCD. We did provide those studies to MolDX, but they were not considered since the comment period had closed. We also conducted two multicenter studies showing that our DecisionDx-SCC test can predict patient responses to adjuvant radiation therapy. To our knowledge, no other biomarker has proven effective in predicting radiation therapy response in squamous cell carcinoma. These studies represent the largest and second-largest research conducted in the SCC population. We believe the robust data supports significant clinical use, as it helps identify which patients will benefit from radiation therapy. This feedback has been echoed by both clinicians and our Medicare contractors. Given the strong evidence from the new publications, our submissions should be accepted as valid under the CMS program integrity manual guidelines.

I just wanted to clarify if there was a negative decision, what options are available at this point?

We already have a positive from Novitas.

No, I think he means the reconsideration.

Reconsideration, yes.

That's a good question. I guess if MolDX comes back and says, we don't think your submission is valid, we would request and I don't think it's a posted information, but we would certainly want to understand exactly why they believe that's the case. I would have a very hard time to understand how from a medical regulatory standpoint, they could make such a case, but we would work with both MolDX as well as with central CMS to understand what we would believe would be an incorrect conclusion. I don't know about timing, et cetera, but that's just the MolDX avenue. The Novitas avenues moving forward.

Our next question comes from Kyle Mikson from Canaccord Genuity.

Great quarter. So just on the gross margin in the quarter, beat our model, beat the Street. Could you talk about the impact from the SCC reimbursement kind of roll off in the quarter? It seems like that was much better than we had feared. So could you talk about that? And maybe going forward, what that looks like kind of the next few quarters into '26?

Yes, we experienced a gross margin that was not as low as what a normalized rate would be due to some payments made during part of the quarter. I anticipate that the adjusted gross margin for the second half of the year may not be as strong as it was in Q2. Nevertheless, it remains one of the better margins in our sector, and we are committed to sustaining that through careful management of expenses related to our facilities and other areas.

Frank, would a mid-70s adjusted gross margin make sense for the fourth quarter, for example?

Yes. I think we said low to mid-70s, Kyle. I think that's what we said in the past.

Yes, of course. Derek, I have one last question for you. Regarding the GI business, there isn't any cross-selling happening right now with our test and TissueCypher. Do you expect that discussions with GIs will become more streamlined and potentially boost growth in that segment, or do you think they aren’t particularly complementary at this stage?

I think where we see the most significant value out of the Previse acquisition is not sort of saying you can pick one or the other doctor. Our TissueCypher test with the work that did is clearly the most validated test that's available today and the accuracy metrics are extremely good, although everything can be better. So it would be a complementary test, I guess, you would say, is probably the way to position that today. But the exciting part of what we see is the potential ability to combine spatialomics with genomics, either be it methylation islands like we have from the Previse acquisition or if it's going to be next-gen sequencing. But if we can get to sort of a spatialomics plus something, which could be methylation technology or sequencing add-ons, we believe that we will be able to get to a more accurate test by using more than one modality or platform versus one alone. So that's the sort of first large focus we have. And clearly, the work coming out of Hopkins coming out of Previse will assist us in accelerating how to get there. And then the next opportunity that we see here is to really take the capsule sponge work that they've spent a few years working on and see how we can accelerate that development as a potential future test, again, mainly for use in gastroenterology offices.

Okay. And just to clarify, you're not expecting any material revenue from Esopredict?

No.

No, not discrete revenue. No.

Our next question comes from Subhalaxmi T. Nambi from Guggenheim.

For DecisionDx-Melanoma, will you need any further studies to support FDA approval?

We don't believe that will be the case. I think the discussions with the FDA regarding our BDD application were productive, and we have sufficient data to support that approval. We won’t know for certain until we enter that process, but we wouldn’t have pursued the breakthrough designation device status if we weren’t confident. So, we feel assured that the data we currently have should support FDA authorization and clearance, depending on their approach.

And then, Derek, how are you prioritizing internal resources between the assets acquired in the Previse acquisition, the SciBase collaboration and the atopic dermatitis assets that you're developing internally?

Starting with Previse, we believe that transitioning from a single platform spatialomics test to a multi-platform, multi-omics approach will ultimately result in a more clinically valuable test. To be straightforward, our ongoing R&D investments in TissueCypher allow us to incorporate an additional platform with minimal resource impact, simply expanding the protocol to capture both opportunities. This is not a matter of prioritization. We are actively exploring ways to enhance our value for gastroenterology customers, and we see the capsule sponge technology developed by Previse as a potential key resource in achieving this. This project fits within the current TissueCypher budget. Regarding the SciBase opportunity, as mentioned, we added a slide in our corporate presentation on the current data. Our internal tests focus on patients moving from topical treatments to systemic therapy for moderate to severe atopic dermatitis. We aim to help those who continue to experience flare-ups while on therapy. Our technology hopes to predict these flares, allowing for timely adjustments in treatment to mitigate the severity of these events, thereby reducing the burden on patients and minimizing associated symptoms. These approaches are complementary, particularly for medical dermatologists managing eczema, many of whom also treat skin cancer. This overlap presents another opportunity to engage the same customer base who are familiar with our skin cancer tests. We have introduced both our internal test for predicting therapy responses in atopic dermatitis and the probe from SciBase, creating a holistic solution for medical offices that aim to address multiple patient issues with our support.

One quick one, a follow-up to Kyle's question on the margins. Based on the current TissueCypher trajectory, do you expect the mix shift to pull downward on your margins this year just because TissueCypher is a lower-margin test? Or have you made some improvements to not really affect that?

We have made significant improvements to the cost structure of TissueCypher. However, it still has a lower gross margin compared to GEP testing. Depending on the growth in volumes, it could potentially impact our gross margin. Nevertheless, we expect to maintain one of the better gross margins in the second quarter.

Our next question comes from Catherine Schulte from Baird.

Maybe first, just as we think about your guide for high single-digit DecisionDx-Melanoma volume growth for the year, and that would imply low double-digit growth in the back half. So as we think about going forward, is that back half growth rate the right go-forward assumption? Or do you think high single-digit would be a better baseline?

We've said high single-digit for the full year, Catherine. So we continue to have that expectation.

Yes, as a jumping-off point for next year was the question.

Is a jumping-off point for next year? I don't have guidance yet for next year on the product. But as we said before, we still think that the test has plenty of room to grow and continue to penetrate that patient base.

We currently have no further questions. So I'd just like to hand back to Derek for any further remarks.

This concludes our second quarter 2025 earnings call. Thank you again for joining us today and for your continued interest in Castle Biosciences.

As we conclude today's call, we'd like to thank everyone for joining. You may now disconnect your lines.