The stem is rotted. It will not heal and eventually the rest of the plant will follow suit. Remember that this is a salvia.......it wants full sun, very well drained soil and only enough water to keep it alive.

As a last ditch effort I'd cut it off just below a leaf node and put that part in water to see if it will root off the node. Get rid of the bottom/root part and the soil; scrub the pot before reusing.