What happened
Shares of Castle Biosciences (CSTL 4.25%) were jumping 13.3% higher at 11:01 a.m. ET on Thursday. The nice gain came after the genetic testing company announced its second-quarter results following the market close on Wednesday.
Castle reported Q2 revenue of $50 million, a year-over-year (YOY) increase of 44%. This result handily topped the consensus revenue estimate of $44.2 million.
The company posted a net loss in the second quarter of $18.8 million, or $0.70 per share. This reflected significant deterioration from the net loss of $1.65 billion, or $0.06 per share, in the prior-year period. However, it still beat the average analysts' estimate of a net loss of $0.92 per share.
In addition, Castle raised its full-year outlook. The company now expects revenue of at least $180 million, up from its previous guidance of revenue between $170 million and $180 million.
So what
The main takeaway for investors from Castle Biosciences' Q2 update is that the company's business model appears to be working well. The market is acknowledging the value of Castle's screening tests.
Test reports delivered for Castle's flagship product, DecisionDx-Melanoma, increased 21% YOY. The company saw even greater improvement with its DecisionDx-SCC test for squamous cell carcinoma, with test reports nearly doubling from the prior-year period.
Other products also gained significant momentum. Test reports delivered for Castle's TissueCypher Barrett's esophagus test more than quadrupled YOY. Test reports for the company's IDgenetic mental health tests soared 224% higher.
Now what
Can the genetic testing stock continue to rise? Probably.
Castle could benefit from several recent studies that demonstrate the value of its tests. If the company makes better-than-expected progress toward its goal of generating positive net operating cash flow by the end of 2025, its shares should rise further.
