It's receding, most likely because you have it pressing up against a rock when it opens up. You need to put it into an area where every head has space to open up, it would need moderate flow to make sure the receded part doesn't get brown jelly and take out the colony.
You didn't leave enough space for the hammer to open up, so the flesh is being torn up on the rocks when it tries to open. Picture your ceiling being covered in razor blades and then lowered to 6" over your face while you're asleep, it's basically that. You can either raise the ceiling by moving it somewhere with nothing near the heads or lose the hammer.
Organism is 100% correct. Hammers want to be in the sand level for the most part and open space around them. Especially the wall type. They also like low flow mod light.
In your second picture, the one head that has it's mouth showing suggest that it's getting too much flow. Do you see how sharp the skeletal structure is? Having the delicate tentacles pushed up against it isn't very good and can lead to trouble.
Find a spot where it's just swaying gently back and forth.