Grand area rules

In the grand area today was my first time being defeated by a squad and then going back to attack the same squad. To my surprise the team that defeated me was at full health and full shields, as if I did not attack in the first place.

In the grand area do defensive squads get restored at the end of each battle? I was fairly certain I would win my second attempt with his toons brought down. 

Or is this a glitch?