Rhythm Pharmaceuticals, Inc. (RYTM) Earnings & Analysis

Latest quarter

Rhythm reported Q2 FY2026 revenue of $71.3 million, above the consensus of $67.1 million. Its adjusted loss per share of −$0.73 was narrower than the consensus loss of −$0.81.

Revenue rose from $48.5 million a year earlier, with Rhythm’s filing attributing the increase primarily to higher IMCIVREE sales volumes in the U.S. and internationally. The company said the increase was partly offset by higher international government rebates, primarily related to sales growth in France. U.S. revenue was $51.0 million for the quarter, while revenue outside the U.S. was $20.3 million.

Rhythm’s gross margin declined to 87.5% from 88.6% a year earlier, while its operating margin moved to −68.1% from −93.4%. The filing shows that selling, general and administrative expenses increased to $67.4 million from $45.9 million, primarily because of personnel costs. Rhythm reported a net loss of $49.3 million, compared with $46.6 million a year earlier. Free cash flow was −$9.2 million, compared with −$23.3 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO David Meeker said the U.S. launch of IMCIVREE for acquired hypothalamic obesity had brought more than 400 start forms from approximately 300 prescribers since approval on March 19. CFO Hunter Smith said patients on reimbursed therapy globally increased by greater than 20% from the prior quarter, driven primarily by the U.S. launch and growth in Bardet-Biedl syndrome (BBS), alongside international growth and early access programs.

Smith attributed $11.3 million of sequential revenue growth to increased U.S. product demand and said a little more than half came from the acquired hypothalamic obesity launch. He said international revenue fell from $23.2 million to $20.3 million in Q2, mainly because of a $3.8 million retrospective French rebate charge, even as reimbursed patient numbers increased.

Asked about the expected discount rate for the new patient population, North America head Jennifer Chien said it was “really early in the launch” to provide detail. She said differences between the hypothalamic obesity and BBS populations could make that rate lower, and Rhythm would monitor it. On payer approvals, Chien said early approvals had been quicker than Rhythm experienced with BBS, though many requests remained pending and the company was working on disease-specific payer policies.

Meeker also discussed preliminary results for weekly treatment candidate RM-718: seven patients had reached 16 weeks, with a mean BMI change of 11.6%. He said two patients discontinued because of adverse events, one following injection-site reactions and another because of ongoing nausea. Asked how Rhythm would choose a treatment candidate for Prader-Willi syndrome, Meeker said the decision was being driven by manufacturing considerations and the “timing of availability of these different formulations and drug supply.”

Smith said Rhythm’s Q2 cost of goods sold was 12.5% of product revenue and varied with inventory balances and manufacturing activity. He said the company ended the quarter with approximately $331 million in cash, cash equivalents and short-term investments, which it expected to fund planned operations for at least 24 months.

Guidance

Smith said Rhythm updated its 2026 non-GAAP operating expense outlook to approximately $363.0 million to $397.0 million, including $175.0 million to $195.0 million for non-GAAP research and development. He said the R&D guidance midpoint was reduced by $20 million because some manufacturing and development activities for RM-718 and bivamelagon shifted from late 2026 to early 2027. Smith said Rhythm did not expect the shifts to affect overall clinical development timelines for either candidate.