1. Drain spinach in colander; squeeze out excess liquid.
2. Melt butter in large saucepan over medium heat. Add flour; cook, stirring, 1 to 2 minutes (mixture will be dry). Whisk in warm milk; cook, whisking, over medium heat until thickened, about 7 minutes.
3. Add salt, tarragon, pepper and nutmeg. Stir in cream cheese until melted. Add spinach. Return to simmer. Stir in heavy cream. Transfer to serving dish. Loosely cover with foil to keep warm.