Here is his story:

It all started when Nega Joe met Sagat. After barely beating him joe 
decided to try to kill him by using his Raging Typhoon. It should have 
worked but instead it cursed Sagat with his evil powers. Now I give you
 the result, Boss Sagat. Sagat now roams this planet to find Joe. He 
wants more power, and taking it from Joe is the only answer.

Now for the record, his HP regenerate will only generate 40% of his hp
 then stop. its not continuous nor has it ever been.