Have seen this a few times at the LFS, hole in center of toadstool. My toadstool had the same issues with central tissue necrosis, but now there is just some scarring. My fear is that once tissue is lost it won't grow back, but the coral should continue to grow around it.
My guess is the center wasn't getting enough flow and detritus accumulated, causing an infection. You are keeping toadstool, a high flow requiring coral, with Euphylia which need very low flow. My suggestion would be to move it where it gets more flow. Best of luck!