This is correct. Happened for me this way everytime as well. Strat needs to be updated to reflect that. Also, since 8.1 removed lvling exp from these battles, Arcane eye is a great backup for replacing the leveling slot. Just mana surge to finish it up.
Since 8.1 with the nerf to trainers XP it isn't any more worth the 'time' wasted trying to level pets in BfA at least. Just swap the leveling pet with, let's say, sentinel's companion who can wreac havoc on the 3rd pet (flying with magic attacks and can sustain the 'beast' damage from it)
After my Sprite Darter died it put my leveling pet in, but then it wouldn't switch off of my leveling pet to my Direbeak hatchling. When I did so manually, it swapped my leveling pet back in, so it died.