RYTHM Reports Q1 2026 Financial Results

ROLLING MEADOWS – RHYTHM Inc. disclosed stronger results for the first quarter of 2026 as the company continued its shift toward branded hemp-derived THC products and licensing deals.

Revenue from continuing operations came in at $13.3 million, a 24% jump from $10.7 million the prior quarter, while gross profit reached $10.4 million, representing a 78% gross margin. Net income from continuing operations reached $19.9 million, though the headline figure was heavily shaped by a $25.6 million non-cash income tax benefit. Adjusted EBITDA came in approximately breakeven, with operating cash flow of $1 million and a cash balance of $33.3 million at quarter end.

The company is positioning itself as a pure-play THC intellectual property house. Its recent move was a restructured deal with Green Thumb Industries. Effective April 1, 2026, Green Thumb’s subsidiary GTI Core converted its licensing fees from revenue-based royalties to a fixed annual cash payment of $70 million with CPI-linked increases capped at 10% per year.

On the product side, Q1 saw RYTHM continuing to build out its direct-to-consumer hemp channel. The company expanded its incredibles lineup and launched 1777 by Señorita – the company’s first non-alcoholic hemp-derived THC spirit. These are bets on the booming THC beverage category, where shelf placement is expanding from dispensaries into c-stores, grocery chains, and live event venues.

Looking ahead, the company is guiding for approximately $22 million in Q2 2026 revenue – a projected 65% sequential increase. That would represent an extraordinary acceleration, though investors should note that the licensing restructuring with Green Thumb, now worth $70 million annually, only became effective April 1, meaning Q2 is the first quarter where the full fixed-fee model flows through the income statement.

RYTHM’s balance sheet also carries weight. As of December 31, 2025, the company held $80 million in senior secured convertible notes outstanding against a cash position of $32.2 million. The Q1 cash balance improved to $33.3 million, but the debt load relative to the company’s market capitalization [approx. $40.8 million as of mid-March 2026] leaves limited room for error if the regulatory environment deteriorates quickly.

What is less clear is how Q3 and Q4 look if Congress does not act on the hemp provision before November. The company’s forward guidance stops at Q2, which is telling. For an operation that has restructured its revenue model around predictability, the back half of 2026 remains an open question that no licensing deal can fully answer.

RYTHM’s management has built a well-capitalized brand portfolio and secured a revenue floor that most Cannabis companies can only envy. The harder work [navigating a federal regulatory timeline that the company cannot control] is still ahead. How that plays out will determine whether Q1 2026 is remembered as the quarter RYTHM turned the corner, or the quarter before the corner turned on them.