Writing a mdlUpdate is the correct way to do this. Is there a reason you want to avoid that?
You could of course get around this by combining the mdlUpdate code at the end of the mdlOutput function. For example, if u=input, x=state and y=output, your mdlOutput should look like this:
y = x;
x = u;
This is okay as long as your DirectFeedthrough is still set to true (if you set it to false, then it is not allowed to access your inputs from the output function). Setting DirectFeedthrough=true is okay if you don't plan to use your S-function block in a feedback loop that causes algebraic loops.
