Medical equipment consisted of the following as of December 31 (in thousands):

Included in medical equipment in rental service above is $6.3 million and $7.4 million, as of December 31, 2012 and 2011, respectively, of pumps obtained under various capital leases. Included in accumulated depreciation above are $3.0 million and $2.2 million, as of December 31, 2012 and 2011, respectively, associated with the same capital leases. Under the terms of all such capital leases, the Company does not presently hold title to these pumps and will not obtain title until such time as the capital lease obligations are settled in full.

Depreciation expense for the years ended December 31, 2012 and 2011 was $5.2 million and $5.9 million, respectively, which was recorded in cost of revenues — pump depreciation and loss on disposal, respectively.