Cook shells as directed on package for al dente; set aside.
Thaw spinach and chop basil.
Combine ricotta and 1/2 cup mozzarella cheese in a large bowl. Squeeze out as much liquid as possible from the spinach (To remove the most moisture, place spinach in a cheesecloth and squeeze.); add to cheeses along with basil, egg, salt, pepper, and nutmeg. Mix well.
Add a small amount of sauce to the bottom of a large baking dish to prevent shells from sticking.
Fill shells with cheese and spinach mixture and place in prepared dish. Top with sauce and remaining mozzarella cheese.
Cover with foil and bake for 30 minutes. Remove foil and bake for 5-10 minutes more until bubbly.