Shares of RYTHM, Inc. (RYM Quick QuoteRYM - Free Report) have gained 3.7% since the company reported earnings for the quarter ended Sept. 30, 2026, compared with the S&P 500 index’s 2.3% decline over the same period. Over the past month, the stock has declined 10.9% compared with the S&P 500’s 6.2% loss.

RYTHM incurred a third-quarter 2026 loss per share of 7 cents, which narrowed from a loss of $5.33 recorded in the prior-year quarter.

Revenues of $23.9 million indicated a rise from $4 million a year earlier. 

Net loss narrowed to $0.5 million from $10.7 million. Operating income from continuing operations reached approximately $1 million, reversing an $8.9 million operating loss in the year-ago quarter.

RYTHM, Inc. Price, Consensus and EPS Surprise

RYTHM, Inc. price-consensus-eps-surprise-chart | RYTHM, Inc. Quote

Beverage Demand and Distribution Expand

Hemp-derived product revenues increased 15% sequentially to $6.4 million. THC beverage depletions, which measure distributor shipments to retailers, rose approximately 15% from the previous quarter and 185% year over year.

Depletions reached an annualized rate of approximately 320,000 cases, measured in 24-can equivalents. This figure represents third-quarter shipments multiplied by four and should not be interpreted as a sales forecast.

RYTHM ended the quarter with its beverages available at approximately 8,000 retail locations across 18 states. It also introduced RYTHM Lifted Lemon, an iced tea and lemonade THC beverage, broadening its product offering.

Gross Profit Improves as Expenses Rise

Gross profit increased to $18.4 million from $1.4 million a year earlier, substantially outpacing the increase in revenues. Cost of goods sold rose to $5.5 million from $2.7 million, allowing more revenue to flow through to gross profit.

Operating expenses increased to $17.4 million from $10.3 million, absorbing much of that improvement. Net interest expense also increased to approximately $1.7 million from $1.1 million, weighing on bottom-line performance.

Adjusted EBITDA, a non-GAAP profitability measure, reached $5.9 million compared with a $6.5 million loss a year earlier.

Management Highlights Licensing Cash Generation

Chairman and Interim CEO Ben Kovler attributed operating cash generation primarily to the licensing business.

As of Sept. 30, 2026, RYTHM’s cash and cash equivalents increased to $48.2 million from $32.2 million at Dec. 31, 2025. Total assets rose to $134.7 million from $106.7 million. Stockholders’ equity increased to $42.1 million from $13 million.

Operating activities generated $16 million in cash during the first nine months of 2026, compared with $20.5 million used in the year-ago period. 

Kovler highlighted growing consumer demand and broader retail distribution, while describing THC beverages as an emerging adult beverage category. Brand exposure included music festivals and entertainment venues, with RYTHM becoming the official THC beverage partner of Chicago’s Navy Pier.

Management continued investing in product innovation, brand awareness and in-store execution. However, its confidence in consumer demand faces a significant regulatory constraint.

Other Developments

RYTHM amended its licensing arrangement with a Green Thumb Industries subsidiary to include Señorita within the fixed-fee structure. The amendment increased the aggregate annual fee by $0.3 million to $70.3 million, subject to contractual annual escalations, while preserving exclusive commercialization rights outside state-regulated dispensary channels where permitted.

Following stockholder approval on Aug. 10, amendments removing a 49.99% beneficial ownership limitation became effective Oct. 10. Green Thumb disclosed that it would consolidate RYTHM’s results from that date, while RYTHM would continue reporting independently.