" Does this mean anything in terms of health?"

I suspect it's behavior and communication. Although the specifics I don't know as in how exactly it would read in the Star Trek universal translator, it seems to be a show of dominance combined with feeling at ease because you are dominant. My very healthy part-Burmese Alpha does it all the time. It creates such a lovely elongation in her body.

I suspect the stretching is accompanied by spraying. I've seen breeding males display that type of action when they are marking their territory.

When you say "courtesy of our neighbors", does that mean you know who owns him? You might ask them if they would be interested in having him *altered*. Not only would it cut down on the spraying, but there's no need to add to overpopulation problems. Maybe you could offer to have it done if they approve? That way you wouldn't have to adopt the cat yourselves, but the problem would be taken care of.