Company: CSTL
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001447362-25-000031
Chunk: 29

Company: CASTLE BIOSCIENCES INC
Filing Date: 2025-02-27
Form: 10-K
Item: Item 7
Chunk 29
---
 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.

Gross Margin

Our gross margin percentage was 78.5% for the year ended December 31, 2024, compared to 75.4% the same period in 2023. The increase was primarily due to higher revenues, partially offset by higher personnel costs, higher expense for supplies and depreciation and higher expense incurred through our expanded laboratory capacity and higher test report volumes.

Research and Development

Research and development expenses decreased by $1.6 million, or 2.9%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily reflecting lower clinical studies costs, lower organizational development costs, and lower expense for laboratory supplies, partially offset by higher personnel costs.

85

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):

Years Ended December 31,20242023ChangeSales and marketing$123,467 $113,657 $9,810 General and administrative76,580 66,495 10,085 Total selling, general and administrative expense$200,047 $180,152 $19,895 

Sales and marketing expenses increased by $9.8 million, or 8.6%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase is primarily due to higher personnel costs, higher sales related travel expense, and higher incurred organizational and business development activities. Increases in personnel costs reflect a higher headcount as well as merit and annual inflationary wage adjustment for existing employees. The higher test report volumes are a result of our continued investments in human capital for our sales organization. Stock based compensation expense included in sales and marketing expense was $17.3 million for the year ended December 31, 2024, compared to $18.3 million for the year ended December 31, 2023.