I got a few questions:
Do you know how he did it?
Are you sure he is exploiting a glitch?
Do you recall which race he was using in the first demo?
After reviewing the first demo, I guess that he is using Sacred Warrior, with the health regeneration items "Ring of Regeneration", "Trinket of Restoration", and "Lifetube" combined.
The second demo shows that he receives HP from rocket jumping, which makes me believe that he uses the race Rarity. The race Rarity has the ability "Heartache" that has the following description in-game: "Up to 15% chance of dealing 20 true damage and healing self for the same amount."
The game thinks the player is hurting himself, as he rocket jumps with the Rocket Jumper. This glitch/bug has existed ever since the race Rarity was added.
Apologies for late response.