CSTL

MKT CAP $982.6MP/E —DIV YIELD —FCF YIELD -0.05%REV TTM $357.3M +3.2%NET INCOME −$19.4MNET CASH $52M52W 18.15 – 43.04NEXT EARNINGS Nov 5SEC XBRL · TTM TO Invalid Date

How CSTL rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

65%

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246

new sentences

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Length

+1,968

words, now 39,233

New in FY2025

Our revenue for our test reports provided for patients covered by Medicare as a percentage of total revenue, was 44% and 47% for the years ended December 31, 2025 and 2024, respectively.
Additionally, there was a commercial payor from which 16% of our revenue from patients were derived for the year ended December 31, 2025.
Variable consideration for claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.
For the year ended December 31, 2025, we had net loss of $24.2 million, and as of December 31, 2025, we had an accumulated deficit of $224.3 million.
Additionally, our performance could be affected by the impacts of geopolitical and macroeconomic developments, such as the invasion of Ukraine by Russia and related sanctions, the ongoing conflicts in the Middle East, economic slowdowns, the recent shutdown of the federal government including regulatory agencies, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, international tariffs, liquidity concerns, bank failures or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets or other evolving macroeconomic developments, among other things.
Furthermore, our revenues from our DecisionDx-SCC test represented a lesser portion of our 2025 revenues compared to 2024 revenues following the discontinuance of Medicare reimbursement as of April 24, 2025.
See “—Risks Related to Our Business—Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC tests, and we will need to generate sufficient revenue from these products and other products to grow our business.” We may also incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in this Annual Report on Form 10‑K, adoption of our products, coverage of and reimbursement rates for our products from third-party payors, and future R&D activities.
We believe our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our planned operations for at least the next 12 months.
On March 26, 2024 (the “Closing Date”), we entered into a loan and security agreement, as amended in April 2025 (the “2024 LSA”), by and between us, our wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Lender”).
The 2024 LSA provides for a term loan in the principal amount of $10.0 million, which was drawn on the Closing Date (the “2024 Term Loan”) and provided for a $25.0 million line of credit that was available at our option from the Closing Date through September 30, 2025, with the same interest rate and maturity as the 2024 Term Loan (the “2024 Credit Line”).
On September 30, 2025, the 2024 Credit Line expired and no draws had been made on it.
We used the proceeds from the 2024 Term Loan for the purpose of developing our future corporate headquarters.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payor coverage and reimbursement arrangements with third-party payors; • our rate of progress in, and cost of the sales, marketing, coverage and reimbursement activities associated with, establishing adoption of our lead products, DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC, among our other products; • the cost of expanding our laboratory operations and offerings, including our sales, marketing, coverage and reimbursement efforts; • our rate of progress in, and cost of R&D activities associated with, diagnostic products in research and early development; • the potential cost of, and delays in, the development of new products as a result of changes in regulatory oversight applicable to our products; • acquisitions of businesses, assets, products or technologies; • the duration and effects of elevated inflation; • the effects on our operations of general political and economic conditions and evolving macroeconomic developments, including geopolitical and macroeconomic developments, such as the ongoing conflict between Ukraine by Russia and related sanctions or ongoing conflicts in the Middle East, public health crises, economic slowdowns, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, bank failures or other disruptions in the banking system or financing markets, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments; and • the effect of competing technological and market developments.
If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our commercialization, R&D efforts or grant rights to third parties to market and/or develop products that we would otherwise prefer to market and develop ourselves.
In March 2024, we entered into the 2024 LSA with the Lender, which provides for a $10.0 million 2024 Term Loan and provided for a $25.0 million 2024 Line of Credit that was available at our option from the Closing Date through September 30, 2025.
Risks Related to Our Business Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC tests, and we will need to generate sufficient revenue from these products and other products to grow our business.
Our revenue in 2025 was primarily derived from the sale of our DecisionDx-Melanoma, TissueCypher and DecisionDx-SCC tests.
Revenues from our DecisionDx-SCC test represented a significant portion of our 2025 revenues but are not expected to be so in our 2026 operating results.
On January 9, 2025, Novitas finalized an oncology biomarker LCD that became effective on April 24, 2025, at which time, the Novitas LCD, Genetic Testing for Oncology: Specific Tests, that includes DecisionDx-SCC as noncovered, became effective.
In July 2025, we submitted reconsideration requests for both Novitas and MolDX LCDs.
Both Novitas and MolDX subsequently confirmed that our requests were valid.
These confirmations represent an important procedural step in the reconsideration process, but it does not indicate coverage or a favorable review outcome.
U.S. and global market and economic conditions have been, and continue to be, disrupted and volatile due to many factors, including public health crises, geopolitical and macroeconomic developments, such as the invasion of Ukraine by Russia and related sanctions, the ongoing conflicts in the Middle East, economic slowdowns, the recent shutdown of the federal government including regulatory agencies, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, international tariffs, liquidity concerns, bank failures or other disruptions in the banking system or financing markets, higher interest rates and financial and credit market fluctuations, volatility in the capital markets or other evolving macroeconomic developments, among other things.
For example, inflation rates, particularly in the U.S., have increased recently to levels not seen in years, and increased inflation has resulted in increased personnel costs and increased prices for certain lab supplies and may result in additional increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all.
Additionally, rapid changes in U.S. trade policy, such as the imposition of additional tariffs and trade barriers, as well as potential retaliatory measures taken by other governments, could increase the price of and/or affect the availability of imported raw materials used in the production of our products.
In response to the invasion, the U.S., UK and European Union (“EU”), along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.
More recently, the escalation of hostilities between Iran and Israel has introduced additional geopolitical instability and uncertainty, particularly in the Middle East.
This conflict has the potential to disrupt global energy supplies, impact shipping routes, and lead to broader regional or international involvement, further straining global supply chains and financial markets.
As a result, our business and results of operations may be adversely affected by the ongoing conflict between Ukraine and Russia and escalating tensions between Iran and Israel, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.
If economic conditions in Europe, the Middle East, or other key markets for our business and the business of our suppliers, manufacturers and collaborators remain uncertain or deteriorate further, we could experience adverse effects on our business, financial condition, results of operations or cash flows.
Our R&D efforts to improve our existing commercial products and develop new pipeline products may require the depletion of our existing database of samples.
If one or more of our primary clinical laboratory facilities become damaged or inoperable or we are required to vacate our existing facilities, our ability to conduct our laboratory analysis and pursue our R&D efforts may be jeopardized.
In addition, the loss of our tissue samples due to such events could limit or prevent our ability to conduct R&D analysis on existing tests as well as tests in active pipeline development.
While we have a business continuity plan in place, and intentionally built out two clinical laboratories in adjacent buildings in Phoenix, Arizona to not only support our growth but to provide certain operational redundancy, our facilities and the equipment we use to perform our testing and R&D could be unavailable or costly and time-consuming to repair or replace.
Our ability to achieve and maintain commercial market acceptance of our existing and future products will depend on a number of factors, including: • our ability to increase awareness of our products through successful clinical utility and validity studies; • the rate of adoption of our products by physicians and other healthcare providers; • our ability to achieve guideline inclusion for our products; • the timeliness with which we can provide our clinical reports to the ordering clinician; • the timing and scope of any regulatory approval for our products, if such approvals become required, and maintaining ongoing compliance with regulatory requirements; • our ability to obtain and maintain positive coverage decisions for our products from government and commercial payors; • our ability to obtain and maintain adequate reimbursement from third-party payors, such as Medicare, which accounted for 44%, 47% and 49% of our revenue from test reports for the years ended December 31, 2025, 2024 and 2023, respectively, with an additional third-party payor accounting for 16% of our revenue from test reports for the year ended December 31, 2025; • the impact of our investments in R&D and commercial growth; • negative publicity regarding our or our competitors’ products resulting from scientific publications, or defects or errors in the products; and • our ability to further validate our products through clinical research and accompanying publications.
We continually seek to develop new product offerings, which requires us to devote considerable resources to R&D.
Before we can commercialize a new pipeline product, we will need to expend significant resources in order to conduct substantial R&D, including clinical utility and validity studies, and further develop and scale our laboratory processes and infrastructure to accommodate additional products.
For example, in 2021, we launched a broad multi-center U.S. based study to discover, develop and validate a genomic test, or series of genomic tests, aimed at predicting response to systemic therapy in patients with moderate to severe inflammatory skin disease.
On December 23, 2024, we announced that preliminary data from our ongoing prospective development and validation study for our pipeline test has shown potential to identify a subset of patients with AD who have increased likelihood to achieve a super response to targeted therapies.
We commenced a limited access launch of the AdvanceAD-Tx test in November 2025 and are planning phased, expanded availability throughout 2026.

and 206 more.

Gone since FY2024

Our revenue for our test reports provided for patients covered by Medicare as a percentage of total revenue, was 47% and 49% for the years ended December 31, 2024 and 2023, respectively.
Additionally, there was a commercial payor from which 15% of our revenue from patients were derived for the year ended December 31, 2024.
Variable consideration for claims for which there are no existing positive coverage decisions, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.
For the year ended December 31, 2024, we had net income of $18.2 million, and as of December 31, 2024, we had an accumulated deficit of $200.1 million.
Additionally, our performance could be affected by the impacts of geopolitical and macroeconomic developments, such as the invasion of Ukraine by Russia and related sanctions or the Israel-Hamas war, economic slowdowns, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, bank failures or other disruptions in the banking system or financing markets, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments.
Furthermore, our revenues from our DecisionDx-SCC test represented a significant portion of our 2024 revenues, but that is not expected to be the case for our 2025 operating results.
See “—Risks Related to Our Business—Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, DecisionDx-SCC and TissueCypher tests, and we will need to generate sufficient revenue from these products and other products to grow our business.” We may also incur significant losses in the future for a number of reasons, many of which are beyond our control, including the other risks described in this Annual Report on Form 10‑K, adoption of our products, coverage of and reimbursement rates for our products from third-party payors, and future research and development activities.
We are an early, commercial-stage company and have a limited operating history, which may make it difficult to evaluate our current business and predict our future performance.
We are an early commercial-stage company and have a limited operating history.
Our limited operating history may make it difficult to evaluate our current business and this makes predictions about our future success or viability subject to significant uncertainty.
In particular, we intend to use a portion of our working capital to increase our headcount, including through the expansion of our laboratory testing operations, sales and marketing and research and development teams, which will increase our operating costs in a manner not historically reflected in our consolidated financial statements.
These anticipated changes in our operating expenses may make it difficult to evaluate our current business, assess our future performance relative to prior performance and accurately predict our future performance.
We will continue to encounter risks and difficulties frequently experienced by early commercial-stage companies, including those associated with increasing the size of our organization and the prioritization of our commercial, research and business development activities.
If we do not address these risks successfully, our business could suffer.
We believe our existing cash and cash equivalents, marketable investment securities and anticipated cash generated from sales of our products will be sufficient to fund our operations for at least the next 12 months.
On March 26, 2024 (the “Closing Date”), we entered into a loan and security agreement (the “2024 LSA”), by and between us, our wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Lender”).
The 2024 LSA provides for (i) on the Closing Date, $10.0 million aggregate principal amount of term loans (“Term Loans”), and (ii) from the Closing Date until March 31, 2025, an additional line of credit of $25.0 million with the same interest rate and maturity as the term debt available at our option (the “2024 Credit Line”).
We drew $10.0 million in Term Loans on the Closing Date.
We expect to use the proceeds for the purpose of developing a commercial office building to be used as our future corporate headquarters, and the remainder for working capital and other general corporate purposes.
Our present and future funding requirements will depend on many factors, including: • our ability to achieve revenue growth; • our rate of progress in establishing payor coverage and reimbursement arrangements with third-party payors; • our rate of progress in, and cost of the sales, marketing, coverage and reimbursement activities associated with, establishing adoption of our lead products, DecisionDx-Melanoma, DecisionDx-SCC, and TissueCypher, among our other products; • the cost of expanding our laboratory operations and offerings, including our sales, marketing, coverage and reimbursement efforts; • our rate of progress in, and cost of research and development activities associated with, diagnostic products in research and early development; • the potential cost of, and delays in, the development of new products as a result of changes in regulatory oversight applicable to our products; • acquisitions of businesses, assets, products or technologies; • the duration and effects of elevated inflation; • the effects on our operations of general political and economic conditions and evolving macroeconomic developments, including geopolitical and macroeconomic developments, such as the ongoing conflict between Ukraine by Russia and related sanctions or the Israel-Hamas war, public health crises, economic slowdowns, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, bank failures or other disruptions in the banking system or financing markets, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments; and • the effect of competing technological and market developments.
If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our commercialization, research and development efforts or grant rights to third parties to market and/or develop products that we would otherwise prefer to market and develop ourselves.
In March 2024, we entered into the 2024 LSA with the Lender, which provides for (i) on the Closing Date, $10.0 million aggregate principal amount of Term Loans, and (ii) from the Closing Date until March 31, 2025, the 2024 Credit Line.
Risks Related to Our Business Our revenue currently depends primarily on sales from our DecisionDx-Melanoma, DecisionDx-SCC and TissueCypher tests, and we will need to generate sufficient revenue from these products and other products to grow our business.
Our revenue in 2024 was primarily derived from the sale of our DecisionDx-Melanoma, DecisionDx-SCC and TissueCypher tests.
Revenues from our DecisionDx-SCC test represented a significant portion of our 2024 revenues but are not expected to be so in our 2025 operating results.
On January 9, 2025, Novitas finalized the oncology biomarker LCD with an initial effective date of February 23, 2025.
Several days later, Novitas changed the effective date for this LCD, extending the effective date to April 24, 2025.
Should the LCD become effective as is, then we would anticipate not receiving Medicare reimbursement for DecisionDx-SCC tests performed on or after April 24, 2025.
U.S. and global market and economic conditions have been, and continue to be, disrupted and volatile due to many factors, including public health crises, geopolitical and macroeconomic developments, such as the Israel-Hamas war and the ongoing conflict between Ukraine and Russia and related sanctions, economic slowdowns, labor shortages, recessions or market corrections, supply chain disruptions, inflation and monetary policy shifts, liquidity concerns, at, and failures of, banks and other financial institutions or other disruptions in the banking system or financial markets, rising interest rates and tightening of credit markets resulting from the conflict or other evolving macroeconomic developments, among others.
For example, inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all.
In response to the invasion, the United States, UK and European Union (“EU”), along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.
As a result, our business and results of operations may be adversely affected by the ongoing conflict between Ukraine and Russia, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.
If economic conditions in Europe and other key markets for our business and the business of our suppliers, manufacturers and collaborators remain uncertain or deteriorate further, we could experience adverse effects on our business, financial condition, results of operations or cash flows.
Our research and development efforts to improve our existing commercial products and develop new pipeline products may require the depletion of our existing database of samples.
If one or more of our primary clinical laboratory facilities become damaged or inoperable or we are required to vacate our existing facilities, our ability to conduct our laboratory analysis and pursue our research and development efforts may be jeopardized.
In addition, the loss of our tissue samples due to such events could limit or prevent our ability to conduct research and development analysis on existing tests as well as tests in active pipeline development.
While we have a business continuity plan in place, and intentionally built out two clinical laboratories in adjacent buildings in Phoenix, Arizona to not only support our growth but to provide certain operational redundancy, our facilities and the equipment we use to perform our testing and research and development could be unavailable or costly and time-consuming to repair or replace.
Our ability to achieve and maintain commercial market acceptance of our existing and future products will depend on a number of factors, including: • our ability to increase awareness of our products through successful clinical utility and validity studies; • the rate of adoption of our products by physicians and other healthcare providers; • our ability to achieve guideline inclusion for our products; • the timeliness with which we can provide our clinical reports to the ordering clinician; • the timing and scope of any regulatory approval for our products, if such approvals become required, and maintaining ongoing compliance with regulatory requirements; • our ability to obtain and maintain positive coverage decisions for our products from government and commercial payors; • our ability to obtain and maintain adequate reimbursement from third-party payors, such as Medicare, which accounted for 47%, 49% and 53% of our revenue from test reports for the years ended December 31, 2024, 2023 and 2022, respectively, with an additional third-party payor accounting for 15% of our revenue from test reports for the year ended December 31, 2024; • the impact of our investments in research and development and commercial growth; • negative publicity regarding our or our competitors’ products resulting from scientific publications, or defects or errors in the products; and • our ability to further validate our products through clinical research and accompanying publications.
We continually seek to develop new product offerings, which requires us to devote considerable resources to research and development.
Before we can commercialize a new pipeline product, we will need to expend significant resources in order to conduct substantial research and development, including clinical utility and validity studies, and further develop and scale our laboratory processes and infrastructure to accommodate additional products.

and 154 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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