Dude, that is a weird looking leather! I'd guess sinularia (finger leather).
It doesn't look unhealthy.
Do you have the proper lighting? Are your water parameters good?
Leathers don't keep their tentacles extended all the time. My toadstool rarely extends its tentacles.
If the flesh starts rotting or discoloring, or if the coral can't stand upright anymore, then it may be sick.