Shares of RYTHM, Inc. RYM have gained 21.9% since the company reported its earnings for the quarter ended June 30, 2026, compared with the 3% growth in the S&P 500 index over the same period. Over the past month, however, the stock has declined 2.4% against the 2.5% growth for the S&P 500.
RYTHM reported second-quarter 2026 earnings of 9 cents per share against a loss of $3.74 per share in the prior-year period.
Revenues of $23 million denoted a sharp rise from $2 million in the year-ago quarter.
Net income was $1.2 million, reversing a net loss of $7.4 million a year earlier. Gross profit increased to $18.5 million from $0.7 million, while the company generated operating income from continuing operations of $1.9 million compared with an operating loss of $6.8 million a year ago.
Other Key Business Metrics
Adjusted EBITDA reached $6.4 million compared with an adjusted EBITDA loss of $5.5 million in the year-ago quarter. EBITDA was $5.2 million versus a loss of $6.5 million. The quarter included $0.6 million of stock-based compensation, a $0.2 million change in the fair value of warrant liabilities and $0.4 million of exceptional items.
Cash and cash equivalents stood at $41.9 million as of June 30, 2026, while operating activities generated $9.7 million of cash during the first six months of 2026, compared with cash usage of $15.1 million in the corresponding 2025 period.
THC beverage depletions reached a record of approximately 25,000 cases across 18 states in June, up from approximately 7,000 cases in June 2025. Hemp-derived product revenues also increased 67% sequentially, supported by THC beverage distribution and direct-to-consumer channels.
Management Commentary
Chairman and Interim CEO Ben Kovler characterized the period as a record quarter, noting that revenues grew 73% sequentially and exceeded the company's prior guidance for 65% growth. Management attributed the performance to accelerating momentum in THC beverages and the first full quarter under RYTHM's amended licensing agreement with Green Thumb Industries. Kovler also pointed to rising beverage depletions as evidence of consumer demand through traditional retail channels, including liquor, convenience and grocery outlets.
Management nevertheless acknowledged limited near-term visibility because of uncertainty surrounding the regulatory environment for THC beverages. The company said it remains confident in the category's long-term viability and plans to focus on disciplined execution and building its THC brand portfolio.
Factors Influencing the Headline Numbers
The amended Green Thumb Industries licensing arrangement was an important contributor to the quarter, with fixed annual cash licensing fees of $70 million taking effect April 1. Growth in hemp-derived products and THC beverage distribution provided another tailwind. Meanwhile, operating expenses increased to $16.6 million from $7.5 million a year earlier. Net income also benefited from a $1.2 million income-tax benefit; before taxes, continuing operations recorded a loss of $0.02 million. Interest expense, net, increased to $1.7 million from $0.3 million.
Other Developments
During the period, RYTHM expanded its presence at live-entertainment venues. Señorita was named the official THC beverage partner of the Lollapalooza music festival and Opry Entertainment Group venues, while RYTHM became the official THC beverage partner of Chicago's Navy Pier.
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RYTHM, Inc. (RYM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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