RYTHM's Q4 Loss Narrows Y/Y on Licensing Revenue Growth

Shares of RYTHM, Inc. RYM have gained 5.3% since the company reported results for the quarter ended Dec. 31, 2025, outperforming the broader market as the S&P 500 Index declined 2.1% over the same period. Over the past month, however, the stock dipped 2.1%, though it still held up better than the S&P 500’s 3.1% decline during that timeframe.

For the fourth quarter of 2025, RYTHM incurred a net loss of $6.62 per share, narrower than the loss of $15.32 per share in the prior-year period.

Revenue from continuing operations totaled $10.7 million, a sharp increase from $0.01 million reported in the year-ago quarter. Gross profit was $8 million against a gross loss of $0.07 million a year earlier, reflecting significantly improved margins.

Despite the strong top-line growth, the company posted a net loss of $13.6 million compared with $24.4 million in the fourth quarter of 2024.

RYTHM, Inc. Price, Consensus and EPS Surprise

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Other Key Business Metrics

RYTHM reported a gross margin of roughly 75% in the fourth quarter, a significant improvement compared with 34% margin recorded in the prior quarter.

However, operating performance remained under pressure. The company recorded an operating loss from continuing operations of $12.9 million for the quarter. According to the company, this was largely driven by an $8.5 million non-cash impairment charge recorded during the period.

RYTHM ended the year with a cash balance of $32.2 million. The company also reported approximately 2.1 million shares outstanding at year-end, along with warrants convertible into 10.9 million shares and convertible notes that could be exchanged for about 3 million shares, excluding interest.

Management Commentary

Chairman and Interim CEO Ben Kovler described 2025 as a transformational year for the company. Management highlighted the company’s rebranding and strategic pivot toward expanding its presence in the hemp-derived THC market. According to Kovler, the company’s portfolio — including brands such as RYTHM, Dogwalkers and Señorita — is central to its long-term growth strategy.

Kovler noted that licensing revenue played a significant role in the quarter’s performance, with approximately $7 million in licensing revenue recognized during the fourth quarter. He added that this revenue included two months of contribution from the company’s most recent brand acquisition, which began generating licensing income on Nov. 1.

Management also emphasized rising consumer demand for THC products despite regulatory challenges. The company said it continues to focus on expanding consumer access to THC beverages and related products across retail and entertainment venues.

Factors Influencing the Quarter

Several strategic initiatives contributed to the quarter’s results and broader business momentum. During 2025, RYTHM acquired a portfolio of brand intellectual property that includes RYTHM, Dogwalkers, incredibles and Beboe. The company also generated $7.8 million in licensing fees for the year by licensing its brands to cannabis operator Green Thumb Industries.

The company expanded distribution of its hemp-derived THC beverages, establishing a retail presence in more than 6,000 locations across 18 states. One notable milestone was the placement of Señorita THC Margaritas in more than 800 Circle K convenience stores, representing one of the largest convenience-store rollouts of hemp-derived THC beverages in the United States.

Additionally, RYTHM launched Señorita THC Margaritas and RYTHM Beverages at Chicago’s United Center through a multi-year partnership, marking what the company described as the first time THC beverages have been offered at a major U.S. arena.

2025 Update

For the year, RYTHM reported revenues of $17.3 million, up from $0.01 million in 2024. Gross profit was $10.2 million against a gross loss of $0.07 million in the prior year. Net loss narrowed to $33.3 million from $41.7 million. On a per-share basis, net loss per share narrowed to $16.68 from $40.92.

Other Developments

Beyond operating performance, the company continued executing strategic moves aimed at strengthening its brand portfolio and market presence. The acquisition of multiple cannabis-related brand intellectual properties during 2025 expanded RYTHM’s portfolio and supported its licensing strategy. Management believes ownership of established brands provides long-term strategic value as the hemp and cannabis markets evolve.

At the same time, the company acknowledged ongoing regulatory uncertainty surrounding hemp-derived THC products, including the risk that federal policy could affect market dynamics. Despite these headwinds, management indicated it remains focused on building consumer-facing brands and expanding product availability across retail channels and entertainment venues.

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