Coral Blocks Do Not Die If Their Surroundings are Sponge-Dried

If you place a coral block at the surface of the water, then dry the surrounding area with a sponge, the coral does not die.

It will die however if you destroy an adjacent block (say the stone block) that is touching the coral block. Placing a block next to it will also update the block. But the block should update as soon as it's sponged and dried.