Hello,
This should have "killed" that Kisame for that fight under the cir*stances you described, making him unusable for the rest of the event. However, as was mentioned, your opponent simply needed to spend a few revive potions to bring that Kisame back to use again for Matsuri. They have up to three revive options in matsuri (six if they used the R&D option) to bring back ninjas they like for this event.
Thanks!