[Clipper]

The hits that he takes for losing combat happen at the same time. If he survived those (which he won't in this case) he would have a chance to use his potions before attempting to run away from each monster, in case their Bad Stuff would cause more hits.

You ruled correctly.

I have seen this officially ruled upon in past threads, but it is a bit hard to think of the search term to find a link for it...