An email template is configured for plain text. When you attempt to send a test all lines are concatenated - but you are certain you have the necessary line breaks in plain text.
Further, you are using SendGrid to send Email.
In a nutshell - If click tracking is enabled on Sendgrid, Sendgrid will automatically convert plain/text email to HTML format. Disable this by logging into the Sendgrid account and going to Account > Global Settings and unchecking "Don't convert plain text email to HTML" check box as shown on the following Sendgrid knowledgebase.