Company: CSTL
Filing Date: 2025-05-05
Form Type: 10-Q
Source: 0001447362-25-000069
Chunk: 129

Company: CASTLE BIOSCIENCES INC
Filing Date: 2025-05-05
Form: 10-Q
Item: Item 8
Chunk 129
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.4% for the three months ended March 31, 2025.

Cost of Sales (exclusive of amortization of acquired intangible assets)

Cost of sales (exclusive of amortization of acquired intangible assets) for the three months ended March 31, 2025 increased by $2.5 million, or 17.9%, compared to the three months ended March 31, 2024, primarily due to higher personnel costs, higher depreciation expense for lab equipment and leasehold improvements and higher lab services cost. 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 expense for lab services also reflects higher test report volumes.

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 expense 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.

31

Gross Margin

Our gross margin percentage was 49.2% for the three months ended March 31, 2025, compared to 77.9% for the same period in 2024. The decrease was primarily due to higher amortization from accelerating our IDgenetix test, higher personnel costs and higher depreciation expense.

Research and Development

Research and development expenses decreased by $1.2 million, or 8.8%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, and primarily reflect slightly lower personnel costs and expense for clinical studies.

We expect to continue incurring research and development 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.

Selling, General and Administrative

The following table provides a breakdown of SG&A expenses (in thousands):

Three Months EndedMarch 31,20252024Change(unaudited)Sales and marketing$36,808 $30,544 $6,264 General and administrative21,812 17,951 3,861 Total selling, general and administrative expense$58,620 $48,