Thanks for all of the advise.
I think that I may be able to get the guy down to $7000 but it is still a ton of work and many parts are needed and many will have to be replaced. Having just finished a frame off restoration on my BJ7 I'm not sure if I have the patience for a THIRD Healey. I also have a 1960 BT7 that I still need to restore that is in the process of going back together. Garage space is short too, but darn, a 100-4 would be cool to have.
$40,000 seems awefully high for a restoration. Here in the Upper Midwest prices for labor are fairly cheap. I calculated what I put into my BJ7. I did it all by myself and had my bodyman, brother-in-law pull the trigger on the paint gun for a case of beer. I probably have $20,000 in the car. Of course, my labor would probably be at $2.00/hour for the 1000s of hours but working on it, but Healey labor shouldn't be treated as a commodity anyway.